Bullish trading seen

MANILA, Philippines—Local stocks are seen trading with a bullish bias this week as investors across the globe increasingly bet that Greece and Italy could keep a lid on their financial crises.

Last week, the main-share Philippine Stock Exchange index closed 1.97-percent higher at 4,312.96 on Friday.

The market is now seeing the usual “Santa Claus” rally, said Joseph Roxas, president of stockbrokerage Eagle Equities Inc.

With Greece and Italy expected to pass austerity measures to keep their financial crises under control, Roxas said the index would target 4,400 this week.

A major resistance lies at around 4,530 or close to the all-time high while support is at 4,200.

Fund manager Gus Cosio, president of First Metro Asset Management Inc., said Europe was still the market’s biggest concern but whenever good issues fall to “exorbitantly cheap” levels, bargain-hunters were always quick to scoop them up. He noted that stocks like DMCI, EDC and even Puregold have rebounded from low levels. “You can’t put down a good stock,” he said.

By the end of the year, Cosio said the index would be at 4,500 to 4,600, thus breaching the record highs seen earlier this year.

Cosio said he had a “constructive” view on the recent stream of third-quarter corporate earnings. “Earnings are mostly in line with expectations. However, the market is pricing below consensus,” he said.

AB Capital Securities analyst Maria Arlysa Narciso, however, said global market woes were far from over.

“Although some stocks in the local market are now cheaper compared to their previous valuations, the appetite remains lacking. We no longer see sharp volatility in our own market yet the prevailing uncertainty keeps investors’ feet cold and unmoving,” Ms. Narciso said.

“The key lies on Europe—how the leaders, banks and bondholders of troubled nations will agree to take a pill that is obviously quite bitter to swallow,” she said.

Narciso said disagreements on share in losses, funding requirements and other austerity measures were prolonging the crisis, spilling the weakness and troubles to even emerging economies.—Doris C. Dumlao