Philippine stocks seen to continue climb
The local stock index is seen attempting to set new historic highs this year.
Last week, the benchmark Philippine Stock Exchange index gained 165.18 points, or 3.3 percent, to finish at an all-time high of 5,145.89 on Friday.
Banco de Oro Unibank chief strategist Jonathan Ravelas said last week’s close suggested that there might still be some gas for the index to try the 5,200-5,250 levels. “However, the technical indicator RSI [relative strength index] implies that the market may be susceptible to profit-taking,” Ravelas said. “A break below 4,900 may lead to further losses down to the 4,800 levels.”
Despite concerns on rising valuations, the PSEi continued to rally to new heights on the back of strong liquidity in search for better yields in a low interest-rate environment globally. And with Europe still grappling with fiscal woes, more global funds were investing in Asia and the Philippines was gaining a “most favored nation” status.
At around 4,100, the market is believed to be fairly valued based on underlying fundamentals. But based on technical considerations and for a breakout past 5,000 to be convincing, it will have to surge 3-5 percent or add 150 to 250 more points, which explains the 5,250 target being cited by some analysts.
AB Capital Securities analyst Maria Arlysa Narciso said that with such high liquidity levels in the market lately and confidence in specific sectors, her brokerage house was strongly looking at some banking issues with solid fundamentals.
Among the biggest banks, AB Capital Securities has set its sights on Banco de Oro, which reported 2011 earnings that reached its target, or a growth of 19 percent from the previous year. Year to date, BDO has only advanced 17 percent compared to the other two big banks, 32 percent for Metrobank and 35 percent for BPI.
“With BDO lagging behind the other two, it still has more room to catch up especially with its attractive valuation,” Narciso said.—Doris C. Dumlao
