MARKET OUTLOOK
President Rodrigo Duterte’ State of the Nation Address (SONA) today could set the tone for stock market trading moving forward.
While Monday’s close will come before Duterte takes to the podium at 4:00 p.m., investors will be looking for pronouncements regarding issues ranging from more tax reforms to autonomy in Mindanao.
The President’s SONA may turn out to be the catalyst to get investors back into this market as it may give them the assurance that they have been longing for.
Attention would be focused on plans to lower corporate income taxes and reduce fiscal incentives, renewable energy, the expansion of the “Build, Build, Build” program, the Philippines’ territorial dispute with China, moves to end illegal contractualization and progress with regard to the proposed Bangsamoro Basic Law.
Investors would like to see if the key direction hasn’t changed, or may divert in light of the initial phase of the tax reform plan’s impact on inflation. This will be crucial to listed companies’ capital expenditure rollout, including timing of budget preparation for large-ticket infrastructure undertakings. As such, any hint to affirm this year’s growth prospects could invigorate appetite for equities, especially if these would lead to increased direct investments and job creation.
Should the president’s report fail to uplift market sentiment, the main index may continue moving sideways and retain its low trading volume instead.
At the same time, investors are also looking forward to the release of Q2 corporate earnings. With the recent outflow of foreign funds from the local market, foreigners may be positioning themselves and are merely waiting for opportunities to move in.
Support is from 7,340 to 7,185, while the resistance to overcome is 7,450 to 7,500.
