PSEi seen testing new highs

Local stocks are seen continuing to test new highs following a bullish breakout recently but many issues are likewise becoming attractive for profit-taking.

Last week, the main-share Philippine Stock Exchange surged 2.9 percent to end at a new record high of 4,747.90, led by index heavyweight Philippine Long Distance Telephone Co. The influx of yield-seeking foreign funds made up for the “sell on rallies” of local investors.

But this week, some financial centers in the region like Hong Kong will be on a long holiday break with the Chinese New Year festivities on Monday. This means that the entry of foreign funds could be slower, said Eagle Equities president Joseph Roxas.

Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said the index might move sideways between the 4,600 and 4,800 range this week.

“Chart-wise, it appears that a new support level has now been set at 4,600,” he said.

AB Capital Securities said that the market might have risen “too much too soon” and should be due for correction this week although positive momentum could carry on for another week.

“The markets have shown resilience even in times when it is bombarded with bad news. We have the sense that so much negativity had already been discounted by the markets and all the bad news that comes out are already old news to them.

Moreover, the global trend of rate cuts and other forms of expansionary monetary policies have resulted to so much liquidity that is finding its way to stocks,” the local brokerage said.

The Philippines is one emerging market now attracting foreign hot money as the prospect of a credit-rating upgrade has put it in the radar of most of the major funds, the brokerage said.

“For the year, we have estimated fair value of 4,800 for the PSEi. From a technical perspective, it becomes more bullish as the recent breakout has a target of 4,980,” the brokerage said.—Doris C. Dumlao