Local stocks may continue to trade with an upward bias this week especially after a stronger-than-expected US jobs report boosted global risk appetite.
Last week, the main-share Philippine Stock Exchange gained 1.65 percent to finish at 4,758.57 on Friday on the back of strong foreign inflows. A new record was established on Thursday at 4,822.08 but weekly gains were pared by profit-taking on Friday.
“The market may still be on an uptrend because a lot of foreign funds are still coming in,” said Paul Joseph Garcia, senior vice president and equity fund manager at Bank of the Philippine Islands.
He said the upbeat US jobs report would set a favorable backdrop to the market this week, allowing the main index to test 4,850 on the upside. A key support level is seen at 4,700.
On Friday, Wall Street was perked up by news that the US unemployment rate dropped to its lowest level in three years. The news led the Dow Jones industrial average rallying by 1.23 percent, or 156.82 points, to 12,862.23, its best level since the credit crunch triggered by the collapse of Lehman Brothers in 2008.
“Despite the drop last Friday, the (local) market’s upward momentum looks sustainable,” said Jose Mari Lacson, head of research at Campos Lanuza & Co. “Investors will continue to factor in full-year 2011 results as they are released.”
“The uptrend continues with the test at the 4,882 levels. However, the recent run-up appears to be too steep. Expect some minor profit-taking to the 4,700 level before a test of the 4,900-5,000 levels,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank.
On Friday, the local index was partly weighed down by the selling on JG Summit after affiliates unloaded $125 million worth of shares at a sharply discounted price of P25 each, reminding the market of a similar transaction on Petron, which is not part of PSEi unlike JG Summit. In the long run, however, the equity placement is seen benefiting JG Summit by widening its stock trading liquidity.—Doris C. Dumlao