PHL stocks to firm up ahead of corporate earnings

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PSE bell

By Arra B. Francia

LOCAL SHARES may firm up in the days ahead following the weakness that prevailed last week, as investors await the release of 2018 financial results.

The bellwether Philippine Stock Exchange index (PSEi) plunged 1.03% or 82.36 points to close at 7,908.89 on Friday. On a weekly basis, the main index dropped 2.01% or 162 points, marking the first time that it went down by more than two percent since the start of its rally in the middle of November.

The financial and services sectors pulled down the PSEi, falling by more than 3% each while property was the lone sub-index that managed to rise for the week.

Foreigners turned net sellers for the first time after five weeks, recording net outflows of P141.59 million. This came on the back of a P42.01-billion turnover for the week.

“There is a strong possibility that we will see a bounce off support next week and possibly try for the key-level of 8,000 next week,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

Mr. Mangun noted that the PSEi’s sideways trading in the last few weeks can be classified as consolidation, which could provide the index the momentum it needs for more growth in the long term.

“Companies are beginning to file their annual reports and with double-digit growth so far from companies like $JFC (Jollibee Foods Corp.) and $SMPH (SM Prime Holdings, Inc.), this may provide the catalyst for another potential upside move in the shorter term,” Mr. Mangun added.

JFC’s attributable profit rose by 17.1% to P8.3 billion in 2018, while SM Prime’s net income also jumped by 17% to P32.2 billion.

For online brokerage, the market is seen to form a new base as 2018 earnings results are released.

“Fund managers are seen to assess variables that would support the global macro outlook this year, and how locally listed companies will position relative to their capex and operation-related strategies. This would likely keep gauges at bay for now, as investors retool their respective trading calls, and review these on a quarterly perspective,” said in a weekly market note. added that tamer inflation could boost the market in the near horizon. “Risks of possible spiking would depend on factors that could disrupt demand and supply, especially with no clear resolutions in sight yet to the US-China trade tariff.”

The online brokerage, however, said investors should be cautious for now especially since the midterm elections are nearing, given that the market is still searching for a firmer direction on pending economic policies.

Eagle Equities’ Mr. Mangun placed the PSEi’s support from 7,900 to 8,000, with resistance from 8,100 to 8,300.