Weak trading seen as IPOs sap market funds

The local stock barometer is seen prone to profit-taking this week especially as two interesting initial public offerings (IPO) come to the market.

Last week, the Philippine Stock Exchange index (PSEi) fell by 0.34 percent week-on-week to close on Friday at 7,815.53 as investors pocketed gains ahead of the release of the Philippines’ first-quarter gross domestic product (GDP) data on May 18.

In earlier weeks, the market had priced in a strong performance for the third quarter.

“Most probably [the PSEi] will go down because there will be some liquidation for some people to pay for IPOs,” said Joseph Roxas, president of local stockbrokerage Eagle Equities Inc.

The next key support level is 7,700. If breached, the next key barrier is the bullish breakout level of 7,400 but the pullback won’t likely reach such extent, according to Roxas.

Eagle Cement Corp., a local cement firm that pitches a growth story defying an industry downturn, will sell primary shares from May 16 to 22 to raise as much as P8.62 billion.

Cebu’s leading homegrown property developer Cebu Landmasters Inc. (CLI), on the other hand, is raising as much as P2.9 billion from the sale of shares at P5 each. Its public offering will run from May 19 to 26.

Last week, the PSEi tested an intra-day high of 8,018.39 before heading to a downward correction.

“Chartwise, the week’s close at 7,815.53 continues to highlight a strong resistance exists at the 8,000 levels,” said BDO Unibank chief strategist Jonathan Ravelas.

“Continue to see the market to range between 7,700–8,000 levels. Immediate support and resistance are seen at 7,650 and 8,000 levels, respectively,” he said.