Stock Market

Earnings reports awaited

Posted on August 06, 2012

STOCKS are seen to move within a narrow range this week as investors seek fresh leads,unless earnings reports turn out positive and provide a boost.

The Philippine Stock Exchange index (PSEi) rose by 1.27% to 5,285.91 last Friday from 5,219.55 the previous week, while the broader all-share index climbed by 1.23% week on week to 3,506.01 versus 3,463.30.

The main index had gone along with other indexes that rose in anticipation of new stimulus from the Federal Reserve and European Central Bank. Selling ensued when the new measures did not materialize.

Philippine stocks, however, managed to advance as local firms released positive earnings reports for the first semester.

“Strong first-half earnings reports from BDO (BDO Unibank, Inc.), BPI (Bank of the Philippine Islands) and Union Bank (Union Bank of the Philippines) released [last] week may have provided buying impetus,” said RCBC Securities, Inc. in a market report last Friday.

Foreigners ramped up purchases, their net foreign buying averaging P490 million last week from net foreign selling of P606 million in the prior week, said Freya B. Natividad, analyst at online brokerage, in an e-mail last Saturday.

This week, the main index is expected to move within a narrow range due to the lack of significant leads.

“Market movement [this] week will be sideways with a lower bias,” said investment management firm BPI Asset Management, Inc. in a market report.

“For this week, the market may trade within a range, with a focus on property, banking, and telecom companies. There will also be play on some second- and third-liner [stocks],” said Elizabeth S. Abadillo, analyst at brokerage Angping & Associates Securities, Inc., in a text message yesterday.

Investors will remain focused on companies’ financial standing in the first six months of the year.

“[This week] holds a string of briefings from local issues, particularly by the conglomerates as they are seen to gain in the next sessions based on the released earnings of their subsidiaries,” said brokerage RCBC Securities, Inc. said in a market report
Top conglomerate SM Investments Corp., Ayala Corp. and Aboitiz Equity Ventures, Inc., as well as Ayala-led units Globe Telecom, Inc.

and Manila Water Inc., are releasing their first-half earnings this week.

Index heavyweights Philippine Long Distance Telephone Co. and Pangilinan-led Metro Pacific Investments Corp. are also expected to report their first-semester profit within the week.

Investors, in addition, will be watching out for inflation data for July, which the National Statistics Office will release on Tuesday.

“[A] higher CPI (consumer price index) will reflect gains in the services and industrials sectors. [This] will give an insight on how the country will fare in the second quarter,” said brokerage AB Capital Securities, Inc., in a market report last Saturday.

Abroad, investors will also remain glued to developments in and monitor economic data from developed markets.

“Players will continue to track macro trends overseas, especially those that would support demand growth in advanced economies toward the latter part of the year,” Ms. Natividad said.

Initial resistance and support levels for the week are pegged at 5,372.03 and 5,143.99, respectively, on the back of an anticipated lower market volume during the August “ghost month” -- a typically weak month for business anchored on an ancient Chinese superstition, AB Capital said. -- Franz Jonathan G. de la Fuente