Philippine stocks on correction course

Local stocks may continue to correct in the days ahead as share prices are now seen to be expensive in terms of regional valuations.

Last week, the main-share Philippine Stock Exchange index (PSEi) shed 2.6 percent to close at 5,158.14 on Friday.

Based on last week’s finish, Banco de Oro chief strategist Jonathan Ravelas said there would be further tests toward the 5,000 to 5,100 levels. Any upside, he said, would be limited to 5,250 to 5,300.

According to AB Capital Securities, the eurozone crisis has placed a lot of pressure on local share prices.

“As a result, the PSEi seems to be in the midst of a healthy correction. The question now is, how deep the correction can go,” AB Capital Securities said.

AB Capital noted that volume on the recent run-up to record levels had been thinner than those of earlier rallies. It said that the immediate support for the PSEi would be at 5,150 which, if breached, could trigger sell signals for traders.—Doris C. Dumlao