The stock market could see slight rallies or fall further this week, analysts said, with investors expected to stay at the sidelines as they await news on the economy’s performance last year and the outcome of a US Federal Reserve meeting.
Luis Limlingan, managing director at Regina Capital Development Corp., said that if the 6,000-point level is not breached, the Philippine Stock Exchange Index (PSEi) can expect some gains.
“However, these rallies … [will be]temporary due to highly bearish technicals. No significant reversal signals were spotted so [the]recovery trend can only extend to 6,300, with a maximum of 6,585,” Limlingan said.
Failure to hold the support could cause further pullbacks to 5,900 to 5,400, he added.
“As such, we reiterate our defensive strategy from last week by selling on rallies until technical readings show reversing signals,” Limlingan said.
Alexander Tiu, analyst at AB Capital Securities Inc. said share prices could move sideways this week as investors were in wait-and-see attitude pending the release of 2015 gross domestic product (GDP) data this Thursday.
“Local investors are waiting for the GDP data. If the country’s economic growth target is met, then they would be more bullish to invest in the equity market, because positive data would reinforce their belief that our economic fundamentals remain strong despite the global rout,” Tiu said.
Jason Escartin, analyst at 2Tradeasia.com, said: “With the country still considered as one of the fastest-growing economies in the region, better-than-expected results could douse part of the pessimism, but there are no clear signals in place yet to cap the global volatility overhang.”
Tiu added that investors were also waiting for the result of the January 26-27 US Fed meeting, the first since interest rates were hiked for the first time in nearly a decade last December.
“Should it (rates) be adjusted, the Philippines is hoping that the adjustment be minimal. Otherwise, foreign investors might withdraw from the Philippines or prefer to go to the US to take advantage of favorable rates,” Tiu said.
Share prices worldwide have been hammered since the start of the year as investors became spooked by further confirmation of a slowing Chinese economy and plunging oil prices.
The PSEi on Friday recovered by 2.03 percent or 123.77 points to close at 6, 208.05, while the wider All Shares inched up by 1.66 percent or 58.34 points to finish at 3, 577.92.