Bull market seen to sustain PSEi throughout 2012

The Philippine stock market is halfway through a bull market supported by low interest rates and much-improved domestic economic fundamentals that should bring the main index to a new high of 5,300 to 5,500 by yearend, CitisecOnline.com analysts said.

But as local stock valuations rose sharply while global funds flocked to emerging markets, some short-term corrective adjustments could be expected perhaps within the next two months, CitisecOnline.com chief technical analyst Juan Barredo said in a briefing Monday.

According to Barredo, the local stock market is now on the third of five so-called “Elliot Waves”—a period he referred to as the middle of a bull market that would usually last longer than the first wave.

“Recent run-ups are reaching overbought zones and have subsisted here longer than usual, but this may be because of the results of the heaviness in global liquidity,” Barredo said.

Barredo said the market would correct soon, but the pullback could be limited to 4,900. As such, he said the index should consolidate below 5,000 while gathering strength to continue the next waves.

In the same briefing, CitisecOnline.com head of research April Lee-Tan said the outlook on local equities remained positive because interest rates remained really low while funds were shifting from developed to emerging economies.

“There’s greater incentive for investors to switch money from bonds to stocks,” Lee-Tan said.

The main-share Philippine Stock Exchange index has so far surged by about 18 percent.

Based on the 2011 earnings results of over 40 companies monitored by CitisecOnline.com, Lee-Tan said 26.1 percent had released better than expected earnings, 43.5 percent were below expectations while 30.4 percent were in line with their expectations.