LOCAL SHARES are seen to sustain their upward momentum on Thursday backed by the continued recovery of water stocks, window dressing, and expectations of a better year ahead.
“Market may continue its upward momentum as water concessionaires continue to recover and on window dressing,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message
He set support and resistance levels at 7,745 and 7,900, respectively.
“We still see an upward bias for the local market tomorrow. The rally could be extended as investors continue to take positions in anticipation of a better year ahead for the market. Local fundamentals, though challenged are still sound,” Japhet Louis O. Tantiango, research associate at Philstocks Financial Inc. said in a text message on Wednesday, noting favorable policies like low interest rates and the expected on time signing of the 2020 budget.
“Global circumstances are also expected to be supportive with the US-China phase one deal about to be signed,” he added.
On Monday, the 30-member Philippine Stock Exchange index continued its recovery to end at 7,872.60, up 99.48 points or 1.28%, while the broader all shares index climbed 46.50 points or 1.01% to end 4,645.33.
Some 478.95 million issues valued at P8.30 billion switched hands on Monday, down from previous session’s P13.15 billion.
Net outflows for Monday’s session was at P1.22 billion, down from previous session’s P1.27 billion.
Water stocks continued to move upwards on Monday. Manila Water Co., Inc., rose 15.19% to end P8.57 each; Metro Pacific Investments Corp., which owns more than half of Maynilad Water Services Inc., gained 4.91% to close P3.42 each, and DMCI Holdings, Inc. increased 0.31% to close P6.40 apiece.
This was fuelled by optimism on water companies as shareholders expect favorable developments regarding the government’s decision on their contracts, which is scheduled for January 2020.
Earlier this month, President Rodrigo R. Duterte warned water concessionaires Manila Water and Maynilad that he would scrap their contracts, since their concession deals disadvantaged the government. He also warned that all of those responsible with the deals will be charged with economic sabotage.
On Dec. 16, Justice Secretary Menardo I. Guevarra said that the Department of Justice is not considering replacing the two companies as water providers, but is renegotiating their contracts. There is still no definite date as to when the companies and the government will meet to discuss the contracts, but this will likely happen early next month.
Fitch Solutions Macro Research said the government’s move to revoke the extension of its agreement with the two water concessionaires reflects “high regulatory risk” faced by the private sector in coming up with deals with the Philippines. This also shows “deficiencies in the due diligence and contracting processes in the past and present.” — V.M.P. Galang