Philippine stocks seen to consolidate

MANILA, Philippines—The local stock market is seen to consolidate this week while investors seek fresh catalysts here and abroad.

Last week, the main-share Philippine Stock Exchange index gained 1.2 percent to close at 5,097.30 on Friday, buoyed by gains in the last two sessions.

For this week, the PSEi is seen to move within a narrow 100-point range of between 5,000 and 5,100, said AB Capital Securities. It said the consolidation mode would prevail on lack of leads to trade on.

“We have the G-20 finance ministers and central bank governors’ meeting in Washington. In the said meeting, Japan and China will hold talks on additional funding for the International Monetary Fund, underscoring the continued close cooperation between Asia’s two largest economies on efforts to stabilize the global financial system. The IMF recently said that they need an increase of as much as $600 billion in lending capacity. This development should provide some added buffer to avert any major financial crisis that could hit the global economy,” the research said.

AB Capital Securities noted that the markets sold off early last week in reaction to some weak economic data but that the reactions might have been overdone. It said the major economies were recovering while the European sovereign debt crisis was easing.

Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said the local market would likely move sideways in the near term.

“A clear break below the 5,000 level may trigger a call for further losses toward the 4,850-4,900 levels, while a break above 5,150 will signal a test of the 5,200-5,250 levels,” Ravelas said.

The local stock market is opening with the backdrop of a correction in Wall Street in the last session. As of Friday’s close, US stocks saw their worst two-week percentage drop in nearly five months. The closely watched Dow Jones industrial index was down 136.99 points, or 1.05 percent, to close at 12,849.59.—Doris C. Dumlao