The Philippine PSEI index continues its upward trend, reaching 7,316 points today, its highest level since March 4, 2022. The index has risen by approximately 19% since its low of 6,158 points on June 21 of this year, reaching the peak of 7,316 points today. It has also gained around 13% since the beginning of this year.
Recent Philippine economic data shows that the country’s economy exhibits genuine resilience, as:
- The export index rose year-on-year in July, recording a growth of 0.1%, exceeding the previous reading (-17.3%).
- The import index rose year-on-year in July, registering a growth of 7.2%, which was better than the previous reading (-7.3%).
- The Gross Domestic Product (GDP) grew by 6.3% year-on-year in the second quarter of this year, surpassing expectations (6.2%) and the previous reading (5.8%).
- The industrial production index grew by 4.7% year-on-year, exceeding the previous reading (3.3%).
- The Philippines’ foreign exchange reserves rose in August, reaching $106.90 billion, surpassing the previous reading ($105.65 billion) and marking the highest level since March 2022.
On the other hand, the Consumer Price Index (CPI) in the Philippines recorded 3.3% year-on-year in August, lower than the expected 3.6% and the previous reading of 4.4%.
The Philippine central bank lowered interest rates by 25 basis points at its meeting on August 15, 2024, from 6.50% to 6.25%, marking the first reduction since October 2023.
Notably, two key factors have provided upward momentum for Philippine stocks:
- The U.S. Federal Reserve’s reduction of interest rates from 5.25%-5.50% to 4.75%-5.00%, the first cut since March 2020, making stocks more attractive.
- The shift of investments away from regional markets like China, due to the continued weakness of the Chinese economy, towards other Southeast Asian markets such as the Philippines.
Technical indicators suggest continued support for the upward trend of the Philippine PSEI index in the coming period for several reasons:
- A “Golden Cross” occurred between the 50-day moving average (blue) and the 200-day moving average (yellow) on August 22, 2024, providing positive momentum to the PSEI index.
- The Relative Strength Index (RSI) is currently at 78 points, indicating an overbought area, reflecting the bullish momentum of the index.
- The Positive Directional Movement Index (DMI+) is around 40 points, compared to the Negative Directional Movement Index (DMI-) at about 13 points. The large gap between the two indicates strong buying pressure on Philippine stocks. More importantly, the Average Directional Index (ADX) is around 27 points, exceeding the 29-point threshold, indicating strong upward trend momentum.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
