Stocks expected to consolidate

LOCAL stocks are seen to consolidate this week as renewed valuation concerns arise.

Last week, the Philippine Stock Exchange index rose by 1.02 percent to close at 7,321.30 on Friday.

The stock barometer trekked higher for six days before succumbing to some profit-taking on Friday due to fresh valuation concerns, said Banco de Oro Unibank chief strategist Jonathan Ravelas.

“Chartwise, continue to expect the local bourse to range between 7,150-7,350 levels in the near-term,” Ravelas said.

The 7,400 level remains a key resistance for now, Ravelas said.

Jose Mari Lacson, deputy research head at BPI Securities, said he didn’t see any reason why the stock market should trade at 18 times projected earnings.

Last week, it was reported that cash-based remittances of overseas Filipino workers (OFW) had risen by 9.1 percent year-on-year in February to $2.1 billion, with contribution from the Middle East region still surprisingly strong with a growth of 36.6 percent.

Real peso value of the OFW remittances in February grew by 16.4 percent year-on-year. “Purchasing power of the remittances posted solid gains for the 3rd straight month mainly due to favorable exchange rate (the peso depreciated by 7.7 percent year-on-year in February) applied to OFW dollar flows. OFW real incomes grew 12.5 percent year-on-year in Jan-Feb boding well for first quarter household consumption,” said Citigroup Philippines economist Jun Trinidad.

Because of the strong OFW data, the peso closed the weekly session on a stronger note, coupled with firmer regional currencies responding to positive China data, Trinidad said.

China reported on Friday that its first quarter gross domestic product grew by 6.7 percent year-on-year. Along with previously reported upbeat trade data, this boosted expectation that the Chinese economy may have somewhat stabilized.