PH market: Subdued trading seen

Local stocks may take a breather this week after climbing to new highs last week on the back of the stronger-than-expected economic growth figures and a banking merger-and-acquisition frenzy.

Last week, the main-share Philippine Stock Exchange index surged 1.56 percent to end at a new all-time high of 5,640.45 on Thursday. The market has climbed to new record highs 32 times this year. The stock market was closed Friday as the nation commemorated Bonifacio day.

This week, the stock market might open favorably but pause for the rest of the week, said Eagle Equities president Joseph Roxas.

With the PSEi closing at 5,640.45 in the last session, Banco de Oro Unibank Jonathan Ravelas said the index might still have some energy to try the 5,700-6,000 levels. “Failure of the market to try these levels could call for further losses toward the 5,450-5,480,” he said.

Freya May Natividad, an analyst at 2TradeAsia.com, said timely “technical pauses” would provide windows for investors to position in equities.

“The market is undoubtedly very liquid at this stage, driven in part by pale returns from fixed-income instruments. Apart from the usual favorite sector plays (such as financials, holdings and property), seek prospective dark horses for 2013, or those that are likely to provide double-digit returns with manageable risks,” she said, adding that these might include tourism/gaming plays.

Natividad sees immediate support for the index at 5,600 and resistance at 5,700.

“The next volatile window to watch would be on US fiscal policies, with QE3 (third round of quantitative easing) framework mostly laid out. For now, the international investing community is watching for firmer economic signs, starting with improved labor numbers in the US as well as consumer expenditure and investment. But until a firm US budget plan has been ironed out, that might give more reason for Asian currencies to further appreciate against the greenback as funds favor Asian markets,” she said.

For those looking at prospects for 2013, Natividad said fiscal pump-priming would still be the main theme at least for the first half of next year, with the usual spending boost from the mid-year local elections.

“Having witnessed the PSEi’s jump to new highs, the buying mood is affirmed following expectations the country is likely to meet the high-end of economic growth estimates this year, of 6-7 percent. With nine-month GDP (growth) already at 6.5 percent, serious debates are likely whether or not the Philippines would be shielded from an expected slower growth trajectory for 2013, especially with ‘grey indications’ in US and Europe,” she said.—Doris C. Dumlao