Local brokers seen to trade with caution
MANILA, Philippines—Local stock brokers are expected to trade with caution this week on lingering concerns that the United States economy may slip back into recession.
Last week, the main-share Philippine Stock Exchange index shed 0.79 percent to close at 4,305.56 on Friday. The equities markets are closed Monday and Tuesday to mark National Heroes’ Day and the end of the Muslim observance of Ramadan.
The market will reopen on Wednesday.
“The market looks like it will remain range-bound between 4,200 and 4,300. [US Federal Reserve chair Ben] Bernanke’s speech in Jackson Hole proved to be a middle-of-the-road statement, which may not encourage positive sentiment,” said PNB Securities deputy chief Manuel Lisbona.
In his speech, Bernanke urged the US Congress to do its part in stimulating hiring and economic growth. But he didn’t mention what the US Fed would do or the measures it would undertake—something investors were hoping to hear. The speech came shortly after it was announced that the US economy had grown by a measly 1 percent in the second quarter, slower than previously estimated.
AB Capital Securities said the two-day holiday this week would increase the chance of a big move when trading resumes Wednesday.
“With a prolonged weekend, investors and markets will be unable to react to events abroad,” AB Capital Securities said.
Whether further measures would be undertaken to perk up the US economy, markets are expected to remain volatile, the brokerage said.
“The decline of the PSEi is also a move to remain liquid in anticipation of the volatility in the foreign markets,” it said.
AB Capital Securities said the stocks to watch out for this week are Lepanto and PLDT—Lepanto for Goldfields decision on acquiring its subsidiary, and PLDT for the decision on whether to pursue the Digitel acquisition after the lapse of the August 26 deadline.—Doris C. Dumlao
