Philippine stocks seen to continue rally
Local stocks are seen setting new highs this week, drawing from the positive momentum from last week’s run-up.
The main-share Philippine Stock Exchange PSEi gained 1.53 percent last week to finish at a record high 4,458.74 on Friday. The index has now advanced 258.74 points, or 6.2 percent, since the start of 2011.
Eagle Equities president Joseph Roxas said the index could have some room to go up this week, especially as Wall Street was back in positive territory on Friday.
“I think we have a way to go. We made a new high and had a good correction that shook quite a few hands before posting new highs but all throughout, there have been sizable net foreign buying so I think this run-up will continue,” Roxas said, noting that 4,600 would be the next target.
AB Capital Securities analyst Maria Arlysa Narciso said that with the help of recent sovereign credit-rating upgrades and the country’s solid fundamentals, the PSEi could move higher to its next target of 4,500.
“The market’s core strength lies on certain industry plays and solid economic data. While there are pressures from the outside, the market will remain resilient with the growing appetite for defensive industries,” Narciso said.
She said AB Capital was biased toward defensive issues: mining and power in particular.
“Given all the measures being sought to keep the economy stable, the opportunity lies in those two sectors as other industries experience a slight weakening,” Narciso said.
In mining, Atlas and Philex are among AB Capital’s top picks while it is also attracted to San Miguel Corp. given its entry into the power industry.
“Since its foray into the heavy industries, the stable revenues from its core businesses are significantly augmented by its new businesses. SMC has the highest power generation capacity at 3,300 megawatt. With demand expected to rise in the future, we think that SMC has the potential to take advantage of the increasing needs for electricity,” Narciso said.
The PSEi’s support is seen at 4,340.—Doris C. Dumlao
