PH SHARES WEEKLY OUTLOOK

Elections, fresh data could fan volatility

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The Philippine Stock Exchange index (PSEi) could experience some volatility as investors turn their focus on the upcoming national elections along with scheduled data releases.

“With attention likely to be drawn to the upcoming national elections in May, expect volatility within 6,800 to 7,000,” said Jason Escartin, investment analyst at online brokerage firm 2TradeAsia.com.

“Investor sentiment is likely to glide with trends overseas, in the absence of new leads within the local arena,” he added, citing support levels at 6,900 points and resistance at 7,000.

Investors will also check on December inflation results and if there will be “increased chances for local monetary authorities to maintain their interest rate policy, at least before the Fed’s [US Federal Reserve] first meeting on 26 January,” Escartin said.


Investors are are likely to take their cue from US data set to come out this month, he added.

“Players may be increasingly sensitive to labor data out of the US, ahead of the Federal Open Market Committee’s (FOMC) meeting in January. Investors are seen to keep an eye on December jobless claims, followed by estimates on ADP’s Employment Change data,” he said.

“Non-farm payrolls and unemployment data on the 8th of January will be a determining factor for sentiment moving forward.”

Justino Calaycay Jr., equity analyst at Philstocks Financial Inc., said election spending would likely boost stocks in the services sector.

“Our concerns over the elections are two-fold. One, it should give rise to good business in the fields of consumer retail, communications (mobile phones, SMS, internet, etc), transportation and media,” Calaycay said.

“Additionally, it should provide employment a good number at least for the next six months. This is the ‘good’ side of the elections,” he added.

Whoever succeeds President Benigno Aquino 3rd later this year, however, will present “a degree of uneasiness to the business and investment community.”

He noted that candidates have yet to present their programs but added cited that historically, every president elected since the post-Marcos era has “translated to positive annual results in the PSEi.”

Calaycay also pointed out that investor interest in the US Fed’s actions would be heightened, given its pledge to raise interest rates gradually, and possible indications of how this will be accomplished based on how the US economy performs.

Trading at the PSE will resume today, January 4, the first trading day of 2016.

The benchmark PSEi closed the year at 6,952.08 last Tuesday, down 0.45 percent or 31.53 points from the previous day, with foreign selling capping the last two trading days of 2015. The wider All Shares index likewise dipped by 0.14 percent or 5.69 points to 3,990.47.

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