LOCAL stocks are seen to trade with caution this week as investors await fresh catalysts to load up on equities.
Last week, the main-share Philippine Stock Exchange index (PSEi) lost 1.6 percent to close on Friday at 7,245.13.
“Expect the PSEi to trade in a corrective mode this week as momentum reversal from indicators and the recent breach below the 260-day moving average will weigh heavily on prices,” said Luis Gerardo Limlingan, managing director at Regina Capital Development Corp.
“This is just temporary. We had a good run. The selloff that’s happening has nothing to do with a specific issue. It’s just money flowing out,” said COL Financial president Conrado Bate, adding this might be investors’ way of saying that other markets would need to catch up to the relatively good performance of the local market.
From hereon, Bate said “the market is going to be a range trade, but what’s critical for it to move to the next level is really earnings now. I don’t think people will push prices unless they see earnings being better than what they expect.”
But year-on-year earnings comparisons might be deceiving given the extraordinarily strong first quarter last year. As such, he said quarter-on-quarter improvement in earnings might be more relevant to watch.
Limlingan said that with the PSEi’s 7,200 level showing strength for the last five trading days, the index would likely move in a “sideways to down” manner. Doris Dumlao-Abadilla