Cautious trading seen

After a mid-week holiday break, local stocks are seen to resume trading with caution today ahead of the release of a crucial US jobs data.

Before the market paused for Wednesday’s Eid’l Fitr (Feast of Ramadhan) holiday, the Philippine Stock Exchange index (PSEi) lost 38.41 points or 0.49 percent to close at 7,808.13 on Tuesday.

In a research note dated July 4, Citigroup said that with little information owing to the US holiday (Independence Day) and ahead of a local holiday in several Asian markets as well as the release of crucial US labor market data at the end of the week, investors were likely to focus on consolidating portfolios rather than on taking on more risk.

As of Tuesday, Citi noted that the ongoing recovery in emerging market (EM) currencies had also appeared to pause.

“While we remain of the view that investors’ need to redeploy capital makes it more likely than not that prices of EM assets will ‘bubble up’, we continue to recommend caution in positioning for large or reliable moves,” Citi said.

Meanwhile, HSBC is upbeat on Philippine equities, which have a 1.9-percent weight in the closely tracked MSCI index.

“We remain overweight on the Philippines on a regional basis. The country’s macro health is impressive, driven by strong, domestic consumption-led growth,” HSBC Equities’ Herald van der Linde said. Overweight is a recommendation to load up equities in excess of a given benchmark such as the MSCI index.

“The recent presidential election that saw Rodrigo Duterte emerge victorious has reduced uncertainty and improved sentiment. Meanwhile, we believe there is ample room for growth in the equity market, with mutual funds positioning near neutral levels,” Van der Linde said. Doris Dumlao-Abadilla