Stocks seen to weaken

The local financial markets were on a holiday break on Friday in celebration of the Lunar New Year turnover.

For this week, the main-share Philippine Stock Exchange index slipped by 2.43 percent to close on Thursday at 6,041.19. Despite an emerging market shakeout, the main index has so far stayed afloat the 6,000 support level.

Investment bank First Metro Investment Corp. and University of Asia and the Pacific said in a joint research “The Market Call” that for 2014, the lack of re-rating catalysts at least in the first quarter would beg a case for a volatile trading environment.

“We see foreign selling to pick up pace as developed markets are now exiting an extended period of sub-par growth or recession. Further reductions in QE (quantitative easing) will also add to the selling pressure,” the research said.

Recently, the US Federal Reserve announced another reduction in its QE—referring to the liquidity-inducing bond-buying operations—by another $10 billion to $65 billion.

“In spite of the sound macro backdrop, we do not see a catalyst for a price-to-earnings (P/E) upgrade in the next three to six months. Previous catalyst are no longer forthcoming, local bond yields are off their record lows and rising in tandem with the US, the peso is weaker on US dollar’s strength, and foreign fund flows are heading toward North Asia and [developed markets],” the FMIC-UA&P research said. Doris C. Dumlao