Stock trading performance to be muted by holidays

MANILA, Philippines—The Philippine Stock Exchange index may move within a narrow band over the next few days given the abbreviated trading week and muted investor interest ahead of another long weekend.

Nonetheless, some local counters may see buying interest especially with last week’s resolution of Greece’s sovereign debt crisis that prompted a rally on Wall Street.

According to AB Capital Online, the PSEi would likely trade between its resistance of 4,400 and its support level of 4,250 in the coming days from its close last Friday of 4,333.72.

Last week, the main stock barometer rose 4.01 percent, or a total of 167 points.

“Some blue chips made their significant contribution to the market, particularly the mining heavyweights, telcos and holding [firms],” the online broker said in a note to clients. “But third liners also made up for the slightly slow activity in the main index as they were actively traded during the week. The uncertainty over the outcome of talks in Europe led some investors to shy away from index issues and opt for the more volatile and speculative ones.”

Local gains were also made possible by the decision of the National Telecommunications Commission to approve the acquisition by PLDT of Gokongwei-controlled Digital Telecommunications Philippines Inc. (Digitel), which sent both stocks—as well as that of their rival, Globe Telecom Inc.—higher.

Going forward, however, the online broker said it expected market focus to center on DMCI Holdings Inc. and leisure and property giant Alliance Global Inc. (AGI).

“Despite where their prices are right now, the stocks are undervalued compared to their business and earnings potential,” it said. “DMCI’s ventures in mining, utilities [power and water], property and construction expose it to growth areas. In particular, the growing demand for coal and power will drive up the financial performances of its respective subsidiaries.”

Meanwhile, AB Capital pointed out that AGI was an “attractive and undervalued stock” given its interests in property, quick-service restaurants, snacks and liquor, and now the addition of entertainment in its portfolio.

“Its business mix in the right interests also gives sound earnings to the parent level,” it said. “Its property arm records earnings that always outperform the previous period and the entertainment business sees a growing revenue stream as the country competes with the region in being the next casino hub.”