By Arra B. Francia, Reporter

LOCAL EQUITIES may continue trading sideways this week as investors reposition their portfolios ahead of the earnings season.

The bellwether Philippine Stock Exchange index (PSEi) moved back to the 8,400 level on Friday, losing 0.56% or 48.01 points to 8,467.56 at closing bell. The market recorded a three-day decline after testing the 8,700 resistance on Monday, when it closed at 8,710.22.

Week on week, the market lost 144 points or 1.7%, weighed down by the 2.2% and 2% decline in the sectors for industrial and holding firms, respectively.

“[This] week there may be some repositioning ahead of window dressing. Earnings will be the main driver,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message last Friday.

A number of listed firms will be conducting their 2017 financial results briefings this week, including PSEi-member firms Semirara Mining and Power Corp. and BDO Unibank, Inc. on Monday, Manila Electric Co. on Tuesday, and Metro Pacific Investments Corp. on Thursday.

These four firms have a combined weight of 12% in the PSEi, according to online brokerage firm 2TradeAsia.com.

Manila Water Company, Inc., PXP Energy Corp., and Philex Mining Corp. will also have their analyst briefings on Wednesday.

The online brokerage added that volatility is expected due to movements in global markets, affected by rising inflation in the United States.

“Expect whipsaws over the coming months, as global markets work their way in absorbing the net effect of US inflation versus employment. This backdrop will support range-trading episodes for now, until players at home have fully assessed the net impact of the initial phase of the tax reform law,” 2TradeAsia said in a weekly market note.

Locally, economists expect the first package of the Tax Reform for Acceleration and Inclusion law to boost inflation in February. Last month, the Philippine Statistics Authority reported that the overall increase in prices of goods and services increased by 4% in January, the highest recorded in three years. This is faster than December’s 3.3% uptick, as well as the 2.7% increase recorded in January 2017.

With this, the Bangko Sentral ng Pilipinas said it expects full-year inflation to average at 3.4% this year, still within the official 2-4% target.

On the other hand, Regina Capital’s Mr. Limlingan added that speculation on MSCI and FTSE rebalancing, which will be released at the beginning of March, may fuel trading activity this week.

“The equities market in general is not singular-phase in direction and volatilities should be expected,” according to 2TradeAsia.com.

The index’ immediate support is pegged at 8,400, while resistance is from 8,500 to 8,550, analysts said.

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