Stocks to consolidate as profit reports trickle in
The local stock market is seen continuing its consolidation phase as investors digest the ongoing stream of local corporate earnings reports.
Last week, the Philippine Stock Exchange index (PSEi) gained a modest 14.2 points or 0.2 percent from last week’s finish of 7,244.79, finding support from both local and foreign investors.
AB Capital Securities noted that the index was buoyed last week by net foreign buying of P243 million against the previous week’s net foreign outflow of P631 million. “It is important to note that Thursday’s net foreign buying of P843 million was the highest level in a single day so far for this year,” the brokerage said.
The PSEi might retest its support at the 7,200 level today, AB Capital said. On the other hand, the brokerage house said the relative strength index (RSI) was indicating a “choppy” or “directionless” momentum while the moving average suggested an “intact and up-trending market.”
“That said, we are possibly seeing a healthy near-term market consolidation ahead of the full release of corporate earnings results,” it said.
The brokerage house said the PSEi might remain in consolidation at the 7,200 to 7,350 range. Resistance of the range trading band was seen remaining at 7,350-7,400 where selling pressure was strongly experienced, AB Capital added.
Last week, AB Capital said the slight increase in the index was likely due to the favorable corporate results that were trickling in. “Investors may thus be positioning ahead of corporate earnings to be released in the coming weeks,” it said.
Meanwhile, AB Capital noted that US equities had been rallying, bringing good tidings to Asian markets. Investors are highly anticipating US President Trump’s supposedly near announcement of tax reform plans, trade policies and fiscal policies.
By March 13, retail tycoon Lucio Co-led Puregold Price Club Inc. will debut on the 30-company PSEi, replacing liquor-maker Emperador Inc.
To qualify for the PSEi, companies must have a public float of at least 12 percent and must be among the top 25 percent by median daily value a month or for at least nine out of 12 months. They must be among the top 30 companies in the exchange based on market capitalization.
The Philippine peso, on the other hand, continued to depreciate to P50.25 against the dollar, the lowest in more than a decade. A depreciating local currency typically unnerves investors who prefer stability in the exchange rate.
This week, AB Capital said the economic events and news to monitor would be the quarter-on-quarter US GDP data; China manufacturing and services data; US manufacturing, employment and crude oil inventory data, and US Federal Reserve Chair Janet Yellen’s speech before the Executives Club of Chicago.
