Stocks to consolidate after last week’s records
By Arra B. Francia, Reporter
LOCAL EQUITIES are seen to take a breather this week after hitting three consecutive record highs in the first trading days of 2018.
The benchmark Philippine Stock Exchange index (PSEi) inched up 0.34% or 30.17 points to close at 8,770 last Friday. The index also managed to book an intraday high of 8,858.07 on the same day.
Week on week, the index jumped 211.58 points or 2.47%.
The holding firms counter posted the largest increase last week, adding 3.8% followed by property’s 3% climb and industrials’ 2.4% increase.
Net inflows for the week stood at P240 million, thinner than the P1.13 billion recorded in the week prior. Value turnover meanwhile averaged at P9 billion during the three-day trading week.
The start of 2018 also saw a new high overseas, as the Dow Jones Industrial Average finished at 25,295.87, breaching the 25,000 mark for the first time last week. Other United States indices also closed on a positive note, with the S&P 500 index adding 0.70% or 19.16 points to 2,743.15 and the Nasdaq Composite index jumping 0.83% or 58.64 points to 7,136.56.
“We go into [this] week with a lot of positive momentum after hitting new highs [last] week. We saw a bit of a correction on Friday which may continue into [this] week. There is nothing to worry about as this is a healthy correction after being up so much in the last few weeks,” Eagle Equities, Inc. Research Head Christopher Mangun said in a market note.
Online brokerage 2TradeAsia.com said the market will be in consolidation mode after the series of highs, citing previous records. The company noted the market went on a four-month consolidation within the range of 7,123 to 7,375 from Jan. 10 to April 1, 2017 after jumping to 7,364 from a base of 6,564 on Dec. 23, 2016.
“This could indicate a new pattern for the bourse if we were to use its recent history as basis. Following the strong ascent, the market could consolidate in the coming weeks, until sequel catalysts emerge to support the new wave,” according to a weekly market note by 2TradeAsia.com.
Analysts still see the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law propelling the market, coupled with the disbursement of funds for the government’s infrastructure push.
“For now, views will be considered how other tax angles in TRAIN would net out consumers’ purchasing power, especially for key commodities consumed by the larger populace,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun noted that the government’s initiatives will push more money into the market, allowing the index to reach the 9,000 level “much earlier than expected.”
The market’s immediate support for the week is seen within the 8,650 to 8,700 range, while resistance could be between 8,800 and 8,850, analysts said.
