STOCKS are seen to rise in the week ahead as investors look for bargains amid the shortened trading week.
The bellwether Philippine Stock Exchange index (PSEi) firmed up 2.39% or 181.11 points to close at 7,752.11 last Friday, marking a 2.73% increase on a weekly basis.
Analysts pointed to the Bangko Sentral ng Pilipinas’ interest rate hike last Thursday for causing the sudden jump in the index, signaling that monetary policy is in check amid rising inflation and robust economic growth.
With local financial markets closed on Monday for the Barangay and Sangguniang Kabataan elections, Eagle Equities, Inc. Research Head Christopher John Mangun still sees optimism being extended this week.
“We are seeing a lot of optimism as the index refuses to break below this 7,500 support level. My biggest concern, however, is still the lack of sellers which allowed buyers to push prices up on very little volume. If we continue to see buying pressure next week, then we may see the index test its next resistance at 7,830,” Mr. Mangun said in a weekly market report.
Papa Securities Corp. Trader Gabriel F. Perez noted that the low trading volume last week — which averaged at only P5.8 billion — indicates that investors are still waiting on the sidelines.
“We could observe from the PSEi’s relatively low value turnover of only P5.7 billion (versus 20-day moving average of P6.5 billion) how some are still waiting on the sidelines for MSCI’s rebalancing announcement… We should look forward to this more so that trading resumes on Tuesday,” Mr. Perez said in an e-mail.
The MSCI index, or Morgan Stanley Capital International index, was set to announce which stocks will be retained, added, or dropped from its list on Monday.
Meanwhile, online brokerage 2TradeAsia.com said companies with a weighted average of around 60% of the PSEi reported better-than-expected first-quarter results, including SM Investments Corp.; SM Prime Holdings, Inc.; Ayala Land, Inc.; PLDT, Inc.; San Miguel Corp.; and Robinsons Land Corp. among others.
“The possibility for performances to be sustained for the remainder of the year appears solid, based on review of their collective capex plan,” 2TradeAsia.com said in a weekly market note.
However, risks such as the implementation of the second phase of the tax reform program and the volatility of the peso prevail.
“It would be fitting to check recurring results, including efforts to sustain EBITDA margins by keeping a lid on costs. Higher earnings translate to capital appreciation, on top of cash dividends,” the online brokerage said.
Eagle Equities’ Mr. Mangun placed the market’s support at 7,625 to as low as 7,500, while resistance could reach 7,900 or 7,830 for the week.
Among other Southeast Asian stock markets, Indonesia fell as much as 1.7% on concerns about continued capital outflows. Singapore shares slipped 0.30%, dragged by financials and telecoms. — Arra B. Francia with Reuters