The domestic stock market is expected to experience light trading this week, as investors are likely to retreat from buying and selling ahead of the Easter holiday, equity analysts said.
Alexander Adrian Tiu, senior equity analyst at AB Capital Securities Inc. in a phone interview said that the local bourse may experience “light” trading volume during the week as the country observes the end of the Lenten season.
“We expect it [trading volume]to be light next week because of the Lenten season,” Tiu said.
The PSEi will only be trading from Monday to Wednesday this week.
He noted, however, that investors may also engage in profit-taking during the week as share prices last week shot up by 2.93 percent or 208 points to 7,306.
The strong performance was led by the services sector, with a 10.12-percent increase; followed by holding firms at 2.56 percent, and the property sector gaining 2.45 percent.
Average value turn over rose by 21 percent to P8.1 billion last week, with foreigners being net buyers at P860 million.
Tiu explained that the Federal Reserve’s decision to slow down the pace of interest rate hikes from four to just two this year gave the stock market a much-needed boost.
“Had the Federal Reserve decided to increase its interest rates last Thursday, more investors would have likely sold their positions in the riskier equities market, and turned to the bond market for safer and better yields,” Tiu explained.
Further, he said that the recent decision of the Fed to take a dovish stance has likewise benefited the peso as an increase in Fed rates would make US assets more attractive than Philippine assets, and thus would lead to a stronger dollar versus the peso.
Tiu pointed out that independent of the Federal Reserve’s recent move, the local bourse has also been stronger as most of the listed companies have released positive strong earnings reports for 2015.
Among these listed firms are San Miguel Corp, which is up by 26 percent to P38.2 billion; Filinvest Land, Inc. increased by 11 percent to 5.10 billion; LT Group Inc. surged by more than half to P6.6 billion; Ayala Corp. soared by 20 percent to P22.3 billion; and Petron Corp. doubled its consolidated net income to P6.3 billion.
Meanwhile, in a separate interview, Nisha Alicer, chief equity strategist at DA Market Securities Inc., said that last week’s rally is an opportune time for short-term investors to reap the proceeds of their gains.
“The recent rally would benefit the investors, especially the short-term investors, to take profit from their recent gains, and for them to review the current market opportunities,” she said.
“For the week, we foresee that the 7,400-level could be attained but the trading volume could be thin as profit-takers may dominate the market. So the trading range is between 7,300 and 7,400,” Alicer added.
In addition, Jason Escartin, investment analyst at 2TradeAsia.com, in a note, said that with the earnings season about to end, investors are likely to review their respective portfolios based on the outlook for the coming year, but that the forthcoming elections in May would not lessen the appetite of investors to invest in the stock market.
“With the earnings season winding down, investors will be taking in the lay of the land and adjust their portfolios based on the outlook for the coming year. Despite political risk being a patent risk ahead of the May elections, the appetite for firms capitalizing on the country’s domestic consumption story is expected to remain robust,” Escartin said.