Weak trading seen as offerings sap funds

Sluggish trading is seen to continue at the local stock market this week in the absence of fresh incentives to buy equities and as initial public offerings (IPOs) sap some of the market liquidity.

Last week, the main-share Philippine Stock Exchange index (PSEi) fell by 0.61 percent to close on Friday at 7,767.62.

Raymond Neil Franco, head of research at Abacus Securities, said the market would likely trade sideways this week.

“Resistance at 8,000 will be strong, especially with negative GDP (gross domestic product) surprise and tepid first-quarter earnings, but so too will be local investors’ ‘buy the dip’ mentality,” Franco said.

The country’s first-quarter GDP grew by 6.4 percent year-on-year, lower than the market consensus forecast of at least 6.7 percent.

Joseph Roxas, president of Eagle Equities, said the market would continue consolidating as investors digest two ongoing IPOs.

Eagle Cement’s P8.62-billion IPO is running until May 22 while Cebu Landmasters’ P2.9-billion IPO will run until May 26. Both companies have received good market reception.

“Chartwise, the week’s close at 7,767.62 continues to suggest the market to range between 7,700-8,000 levels,” said Jonathan Ravelas, chief strategist at BDO Unibank.

“Immediate support and resistance are seen at 7,650 and 8,000 levels, respectively,” he said.

On a global scene, Citigroup said in a research note that politics would likely occupy center stage this week, including ongoing developments in Brazil and the US, Eurogroup/EU discussions on Greece and “Brexit.”