PH SHARES WEEKLY OUTLOOK

Caution to rule trade amid oil price volatility

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Philippine stocks may offer a see-saw ride that loses momentum by the end of this week amid volatility in global crude oil prices and ahead of this week’s two-day US Federal Open Market Committee (FOMC) meeting.

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Analysts agree caution will prevail in this week’s trading, despite possible strong earnings results from some companies as investors opt to take profit while awaiting the rate policy decision of the FOMC.

“Caution is likely to rule overall, in light of overseas developments, plus reaffirmed volatility at the crude futures market,” Jason Escartin, an investment analyst at F. Yap Securities Inc. said.

Escartin sees a “modest recovery” also possible this week, “especially with the reversal of the prior week’s net foreign selling (P59 million on average) to buying (P111 million),” but advised investors to “stick to sectors with solid potential for the second quarter.”

At the close of last week’s trade, the benchmark Philippine Stock Exchange index was down 30.28 points or 0.39 percent at 7,809.54, while the All Shares index shed 5.49 points or 0.12 percent to 4,545.05.

BPI Asset Management describes the initial sessions of the week possibly trending upward but eventually losing steam due to profit-taking.

It said in its weekly market review the benchmark stock index is expected “to continue rising at the start of the week before profit-taking commences” on the back of positive corporate earnings reports.

“In our view, the PSEi will trade within a broad range of 7,750 to 7,860 (points) for the week, with bias to the downside. Catalysts for the week remain to be corporate earnings releases and other company-specific news,” BPI Asset Management said.

AB Capital Securities said if the index fails to breach resistance at 7,865 and breaks support at 7,760 to 7,750, it may only find its next solid support at the 7,530 level.

The “outlook for next week is slightly bearish, with a potential downside of [as low as]7,530 (65-day SMA) if the index fails to breach current resistance levels. As such, investors are advised to slowly take profits, with the dips in support levels seen as possible accumulation points,” AB Capital said.

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