Philippine stocks may consolidate

Should political developments in Greece remain stable in the week ahead, investors may expect local stocks to consolidate.

Last week, the main-share Philippine Stock Exchange index fell by 1.3 percent to end at 4,930.63 on Friday.

The market is in a medium-term consolidation mode as shown by the flat 50-day exponential moving average, said AB Capital Securities Corp. in its weekly outlook.

“This can change if things turn ugly in Europe after the Greek elections this weekend,” the brokerage said.

AB Capital Securities said things could turn volatile if the radical leftist Syriza would win the elections. This will raise the probability…“that Greece will default and exit the euro.”

But a victory of the pro-austerity party may provide some temporary relief to the markets, which AB Capital said would be followed by a period of consolidation.

However, the brokerage firm said there would be no quick fix to the debt crisis in the eurozone.

Despite the Philippines’ strong domestic fundamentals, “the local market may not be spared by the contagion effects of a Greek fallout,” AB Capital Securities said.

The brokerage firm said there could be little bargain hunting to support the market, noting that the market was not cheap at 15 times prospective earnings.

AB Capital Securities said the PSEi’s immediate technical support level was at 4,850, while the major support was at 4,750.—Doris C. Dumlao