Cautious trading seen
Local stocks may trade with more caution this week as investors reassess their strategy after the index retests and struggles to stay at 5,000.
After hitting historic highs, the main-share Philippine Stock Exchange index pulled back by 35.59 points, or 0.7 percent, last week to end at 4,980.71 on Friday.
“The market appears to be exhausted in the near term. Value turnover has thinned. Market P/E (price-to-earnings ratio) has expanded and priced in 12-month forward EPS (earnings per share),” said Mark Angeles, head of research at First Metro Securities. “Redemptions from Philippine-focused funds have increased for two consecutive weeks. With these in mind, we prefer to reduce exposure on strength.”
Manny Lisbona, deputy chief at PNB Securities, said the main index would likely stay between 4,900 and 5,040 this week.
“We can still buy the dips but would advise caution for the meantime. I think there’s some underlying pressure on the sell side that should play out within the next quarter,” Lisbona said.
Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said last week’s close at 4,980.71 continued to support tests above the 5,000 to 5,050 levels in the near term.
“The market appears to be finding support at the 4,900-4,910 levels. A break below these levels could call for further losses toward 4,750-4,800,” Ravelas said.
The local stock market trimmed its losses in the last two sessions last week after Greece obtained crucial support from private bondholders on a debt deal. For the week, the PSE still generated net foreign buying amounting to P1.2 billion.
On Friday, trading in Wall Street was firm as a strong monthly jobs report overshadowed jitters over a technical default by Greece. The Dow Jones industrial average gained 14.08 points, or 0.11 percent, to finish at 12,922.02.
BPI Trade said that among the US economic indicators due this week are retail sales, FOMC meeting announcement, jobless claims, producer price index, consumer price index and industrial production.—Doris C. Dumlao
