BUSINESS optimism may yield to profit-taking in stocks this week after record-breaking runs the past sessions, including the new closing high on Friday, March 6.
Positive sentiment from benign inflation, good corporate earnings and other strong macroeconomic leads could buoy trading initially but pressure from profit-takers could eventually weigh on the market before the end of the week.
“We expect the local equities market to continue rising at the start of the week before profit-taking commences,” BPI Asset Management said in a weekly review.
“In our view, the PSEi [Philippine Stock Exchange index] will trade within a broad range of 7,780 to 7,900 for the week, with bias to the downside,” it said. “Catalysts for the week include the PSEi rebalancing as well as corporate earnings releases.”
On Friday, the PSEi hit a new all-time closing high at 7,861.33, the 19th time this year it set a new record. The market was underpinned by investor optimism, unmindful of an uptick in February inflation to 2.5 percent from 2.4 percent a month ago – a reversal of a five-month slowdown. The February figure is significantly lower than the 4.1 percent posted a year earlier.
Jason Escartin of F. Yap Securities Inc. said the market should “expect pauses” in buying this week.
“Pauses are seen this week, given the weight of the above issues on select large-cap, index stocks. Market players might check on clarity in regulatory approaches, to ensure the Philippines will provide an environment that is fair for business capitalists,” Escartin said.
Despite expectations of a correction this week, RCBC Securities’ Anton Alfonso and Eagle Equities’ Joseph Roxas see the local equities market well anchored to the economy’s sound fundamentals.
“Despite [some selling pressure], the general trend is still upward as the Philippines remains a standout among economies, not only in the region but in the world,” Alfonso said.
“The market will still be well bullish. Investors are still looking for cheap second-liners mostly in the real estate sector… I think it’s really ‘buy on weakness’ in the following days,” Roxas said.