The all shares index was up 0.82 percent at 4,809.48, while all of the sub-indices except for the property index finished with gains.

The Philippine Stock Exchange index (PSEi) is seen to break above the 8,000 resistance level this week at the conclusion of the ‘ghost month.’ Local investors are to outpace foreign investors, an analyst said.

The main index closed 1.14 percent higher at 7,979.66 last week, cutting the market’s five-month winning streak by ending August down 0.8 percent. Still, head of research for AAA Equities Christopher Mangun said this was still impressive considering that the bourse was down five percent in mid month.

The all shares index was also up 0.82 percent at 4,809.48, while all of the sub-indices, except for the property index, finished with gains.

Turnover value improved to P40.05 billion despite the shortened trading week, but foreign funds still escaped the market with net selling at P2.14 billion. Mangun partially attributed this to the MSCI rebalancing which saw investors reposition themselves in the market.

“The PSEi may break above its resistance at 8,000 this week. For this to happen, we need to see stronger buying from local investors against continued foreign selling,” Mangun said in a weekly market note.

The local stock market’s performance last week was also prompted by the upbeat trading in key equities markets in the United States on the back of positive progressions in the trade war between the US and China.

Here, the Bangko Sentral ng Pilipinas (BSP) forecasts inflation to fall below 2 percent in August from 2.4 percent in July. The BSP is also taking cues from foreign central banks as it opens up the possibility of easing rates by another 25 basis points before year-end. It has so far cut benchmark interest rates by 50 bps this year.

Additionally, the central bank is also mulling over further reducing the reserve requirement ratio for banks, a move that will add liquidity into the market.

But while the domestic environment has much to offer for optimism, Philequity Management Inc.’s business development vice president Miguel Agarao said external headwinds will remain as key drivers for the index’s performance.

“Stocks are caught in a tug of trade war between (US president Donald) Trump and the central bank, and expect news towards trade to continue to drive the stock market,” Agarao said in a market outlook in Ortigas on 31 August.

“It will be unpredictable because of Trump, but fortunately, because of a global slow down, central banks have responded with cutting interest rates. And if they do succeed in staving off a slowdown and a recession, it will be very good for stock prices,” he added.