MANILA, Philippines–The stock market reopens Monday after a long Christmas holiday break. It will be the last trading day for 2014 as the market will again pause for a New Year turnover break starting Tuesday.
The last trading day of 2014 is seen to be supported by yearend optimism but trading volume will likely be thin as several trading participants have gone on a long break as Monday’s trading is sandwiched between two long holiday breaks.
The market takes a break again from Dec. 30 (Rizal Day) to Jan. 2. For 2015, the first trading day will be Jan. 5.
Citi equity strategist Markus Rosgen said Asia had significant valuation support, with the Philippines still enjoying “overweight” status based on market consensus despite lofty valuations.
“Overweight” is a recommendation to accumulate in excess of a benchmark index while “underweight” is the opposite.
“Within Asia, China, Korea and Singapore offer the most value in absolute terms and also relative to their own history. India, Indonesia and the Philippines are most expensive markets on an absolute basis; the last two are also expensive relative to their history, as is Thailand,” Rosgen said.
Rosgen said earnings projections were not being revised upward for any market in Asia.
“While economic surprises in Asia are still biased to the downside, misses are small rather than troubling. GDP (gross domestic product) forecasts have come off since the start of 2014 and may be clipped again for 2015, but subdued expectations mean the risk overall is small,” Rosgen said.
In the meantime, the strategist said stronger US dollar would mean sharp falls in commodity input costs, allowing Asia to cut interest rates further.
“As a commodity consumer, Asia benefits from weaker input costs. Our equity strategy team’s sentiment indicators are below average for Asia. Investor focus is on Asean rather than North Asia, with India, Indonesia, the Philippines and Thailand consensus overweights,” Rosgen said.
On the other hand, Korea, Taiwan and China are the biggest “underweights,” he said.–Doris C. Dumlao