Stocks to trade sideways ahead of PHL GDP data

By Arra B. Francia
Reporter
STOCKS may trade sideways in the week ahead with a possible upward bias should economic growth figures come in better than expected.
The 30-company Philippine Stock Exchange index (PSEi) surged 1.51% or 119.92 points to close at 8,047.12 on Friday. On a weekly basis, the main index was higher by 1.81% or 143 points thanks to all sectors ending in the green, especially financials and property which jumped 2.4% and 1.86%, respectively.
The financials sector’s gain was mostly due to the heavy losses it posted in the previous week, as the Hanjin Philippines’ $412-million default on five of the country’s largest banks caused investors to panic.
The PSEi’s ascent was supported by an average turnover of P11.2 billion for the week, alongside a net foreign buying figure of P1 billion.
“The market is extremely strong right now with turnover value picking up dramatically as well as foreign inflows. If this continues, we may see it back at 9,000 sooner than we think,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Mr. Mangun noted that the PSEi, however, may trade sideways as it slowly moves higher.
“GDP numbers for the last quarter of 2018 is expected to come in [this] week and if it comes in above expectations, then we may see it reflected in the market’s performance,” Mr. Mangun added.
The Philippine Statistics Authority will announce fourth-quarter and full-year 2018 gross domestic product (GDP) growth on Thursday, Jan. 24.
Online brokerage 2TradeAsia.com said whether the PSEi could sustain this upward trend will depend on several factors, such as the United States-China trade deal.
“Markets have yet to price-in uncertainties on the outcome of US-China trade deals, given tariffs’ impact on consumer demand…Over the short-term, investors would check if progress would be made during the 90-day timeframe, or possibility for talks to be extended further,” 2TradeAsia.com said in a market note.
Equities markets will also continue to be affected by rate hikes by the US Federal Reserve, which are dependent on the US labor market. 2TradeAsia.com sees labor demand to outpace supply, leading to lower unemployment. With this, the US must ensure that policies are in place to tame higher wage costs.
The online brokerage further cited the Philippine Congress’ approval of the 2019 National Expenditure Program, which is vital in the rollout of the government’s infrastructure projects.
“Excitement has run high for possible upswings in construction trend, one that is deemed integral to listed firms’ capital raising calls this year,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun placed the market’s support from 7,900 to 8,000, with resistance from 8,100 to 8,300. He also noted that blue chips will continue to be traded heavily supported by more foreign fund inflows.