Market pullback seen; prospects still rosy

Stock market investors are seen locking up some gains this week after the recent record rallies while prospects remain rosy for the rest of this year.

Last week, the main-share Philippine Stock Exchange index added about 45 points or 51 percent to close on Friday at 8,814.62.

Christopher Mangun, research analyst at Eagle Equities Inc., said some pullback might be seen this week to build a base between the 8,500 and 8,700 levels. This is in order to build momentum to eventually breach 9,000.

“If we see the market lose a hundred points or more (this) week, I would not be worried as these are buying opportunities,” Mangun said.

“I think we will continue to see the foreigners increase their positions in the weeks to come. With our current path, we will break 9,000 in the next couple weeks,” he said.

Mangun said there was net foreign buying of some P2.5 billion last week, sending a very positive signal to the market.

The PSEi, which gained 25 percent in 2017, climbed in the first two weeks of the year.

Jonathan Ravelas, chief strategist at BDO Unibank, said the market was driven by optimism that proceeds of Tax Reform for Acceleration and Inclusion would further support infrastructure spending and help sustain economic growth.

The main beneficiaries of TRAIN are taxpayers earning above minimum wage but below P250,000 per year as they will get the largest increase in disposable income of up to 16 percent. There are three million Filipinos or 40 percent of the 7.5 million taxpayer base falling into this category.
The main index last week hit a new record high of 8,926.78 in intraday trade before being hit by profit-taking later in the week.

“The week’s close of 8,814.62 highlights the market still has some gas to try the 9,000 to 9,100 levels,” Ravelas said.

BDO sees support and resistance levels at 8,600 and 9,000, respectively.