Market may take breather after climb to 9,000

By Arra B. Francia, Reporter

LOCAL SHARES may take a dip in the coming days after reaching three fresh peaks last week, with foreign investors turning to Western markets for higher gains.

The main index breached the 9,000 mark last Friday, gaining 0.47% or 42.03 points to finish at 9,041.20.

Week on week, the Philippine Stock Exchange index (PSEi) gained 125.28 points or 1.4%, lifted by services which added 3.54%, holding firms (up 2.3%), and property (up 2.2%).

“With three days left of trading in January, I will not be surprised if we see a pullback [this] week as we are currently up 5.7% for the month. If we do see a pullback, our first major support will be at 8,910 and if that is breached we may see it come all the way down to 8,830,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a market note.

Foreigners remained buyers for the week at P500 million, although lower than the prior week’s P2.86 billion in net purchases. 

“We saw a slowdown in net foreign buying at around P500 million compared to the last three weeks due to foreign investors focusing on trading western markets as they had significant gains [last] week,” Mr. Mangun said.

US markets also reached new highs last week, with the Dow Jones Industrial Average trading above the 26,000 mark on the back of positive sentiment on corporate earnings for 2017.

“However, if we see an increase in foreign capital [this] week, we may maintain our momentum and stay above 9,000,” he added.

Online brokerage firm 2TradeAsia.com meanwhile said the market’s rise to the 9,000 level could serve as the market’s “base-building” effort to support its long-term trend.

“Breathers should be regarded as opportunities to position gradually on stocks slated to perform this year. Our overweight view is maintained for infra/holdings; consumer-retail; property; banks; logistics and electronics, as these are widely seen to benefit from improved economic growth prospects,” 2TradeAsia said in a weekly market note.

A negative outlook is still seen among power/energy, water, telco, and gaming firms, given the regulatory hurdles in these sectors. 

The brokerage also warned of volatile risk premiums resulting from the debates on the government’s potential switch to federalism, that could weigh on business sentiment. Investors however should focus on efforts to expedite the distribution of funds for critical infrastructure projects.

“The clear guide rests on how fiscal plans on ‘Build, Build, Build’ will be hastened and resolving administrative issues without necessarily sacrificing transparency relative to proponent selection and implementation of mutually beneficial terms and condition,” the brokerage said.

2TradeAsia pegged the bellwether’s support within the 8,850 to 8,880 range, while resistance is from 9,100 to 9,200.