Philippine stocks seen to consolidate
MANILA, Philippines—Amid the volatile external environment, local stocks are seen continuing to consolidate this week while building a base for a much-awaited yearend rally.
Last week, the main-share Philippine Stock Exchange index (PSEi) inched up 1.58 points to finish at 4,292.50, although the net foreign buying in the last few sessions suggested that those expecting a Santa Claus rally would not be disappointed.
“This coming week will be a consolidation period, which should be healthy for us,” said Eric Claudio, market strategist at Pentacapital Investments.
He said the main index would likely trade close to 4,300 and on good days, try to revisit the recent high of 4,397. On the days that the market would correct, Claudio said the main index would likely pull back to fill the gap close to 4,255.
“It seems that on the technical side, the market is looking for a consolidation or correction. There will be a yearend rally but technical analysts would like to see some consolidation first. That’s why in the
last few days, despite the net foreign buying, gains haven’t been substantial,” Claudio said, noting that many technical analysts were selling on rallies expecting to buy back those shares during the consolidation phase.
Seasonally, he said the first half of December would usually be weaker while the second half would be stronger.
On the external environment, Claudio said developments were still mixed. While the United States seemed to be spewing out with a string of positive numerical data, he said the European Union was still struggling. “But on the balance, I’d imagine this will be relatively positive.”
With the EU, he said it’s a matter of finding the right formula to stabilize the situation.
“I don’t think they will find the magic formula yet. They are not wishing for that. They will just want to probably find a solution to take away a lot of the concerns of a longer and deeper correction for the market or a recession,” Claudio said.—Doris C. Dumlao
