PH SHARES WEEKLY OUTLOOK

Shares outlook: Flat to lower on HK protests, end of Fed bond buying

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PHILIPPINE stocks are expected to trade flat to lower this week, with investors remaining wary over the continuing protests in Hong Kong and as the US Federal Reserve prepares to end its bond buying or quantitative easing (QE) program.

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Last week, the PSEi recorded a 0.2-percent decline week-on-week as investors exited the market on geopolitical concerns.

The mining and oil sector was hit the most as metal prices slumped on the London Metal Exchange, driving down the share prices of nickel mining companies such as Nickel Asia Corp. and Marcventures Holdings Inc.

For this week, Alexander Adrian Tiu of AB Capital Securities Inc. said in a weekly market report that the PSEi will likely see a negative bias as the market is entering a medium-term correction phase.

He said a failure to breach the 7,260 resistance level would be a signal “that the index may now be entering into a medium-term correction phase with downside targets at 7,000 and 7,050.”

For her part, Joyce Anne Ramos also of AB Capital said that the market is expected to move sideways with a downward bias, with investors watching out for the end of the US Fed’s QE program this month and as the Hong Kong protests continue.

“We could have a sideways [movement]with a downward bias. If it goes above 7,260 [this]week, market may retest 7,300 and 7,400. Support is at 7,200. The Fed halting of its bond purchase program and the Hong Kong protests remain as catalysts,” she said.

Through the bond buying program, the Fed has been buying billions of dollars worth of government bonds and securities monthly to keep interest rates low and help the US economy recover.  With the US economy apparently on a firm recovery path, the Fed is expected to end its bond-buying program this month. For the first time since 2006, the Fed is expected to start raising rates next year.

Despite the negative prospects for the week, Jason Escartin of F. Yap Securities Inc. said some stocks that lost largely last week may see modest gains in line with positive prospects next year and remittance growth in the fourth quarter.

“Sectors that were aggressively downtrodden by the sell-off might go through relief rallies, especially large-cap telcos. Energy-related shares and property might also be favored, in light of demand prospects for 2015 and remittance growth for the fourth quarter, respectively,” Escartin said.

“Overall, the PSEi would likely build stronger bases, in time for the seasonal run-up at year-end. Buy on dips.”

He said immediate support is seen at 7,150 while resistance is expected at 7,270 to 7,330 points.

On Friday, the bellwether PSEi rose50.77 points or 0.71 percent to 7,247.03, while the broader All Shares index likewise went up 26.57 points or 0.63 percent to 4,277.09.

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