PH SHARES WEEKLY OUTLOOK

Lower GDP lends downward bias

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The Philippine Stock Exchange index (PSEi) is seen tracing a sideways pattern this week, reflecting a bearish mood in light of the weak market sentiment over the macroeconomic results in the first quarter.

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Investors will look for developments overseas after having been disappointed by the first quarter gross domestic product (GDP) results released last Thursday, BPI Asset Management said in its weekly market review.

“We expect the PSEi to recover from this week’s decline, as market players take cue from movements globally. The PSEi trading range for the week is expected to be at 7,300 and 7,500 with downward bias. Movements will be strongly influenced by the results of the first quarter GDP,” BPI Asset Management said.

The Philippine Statistics Authority reported the GDP grew by 5.2 percent in the first three months of 2015, a three-year low that also fell short the 6 percent to 7.3 percent forecasts by analysts and economists.

The official figure also dissipated the momentum from the revised 6.6 percent growth in the preceding quarter and the 5.6 percent recorded in the year-earlier period.

BPI’s projections were echoed by AB Capital Securities Inc. In its weekly report, Ab Capital said “given the bearish macroeconomic sentiments, we may expect continuous negative foreign outflows in the market for the following weeks possibly dragging shares lower.”

But AB Capital said there may be upsides due to technical factors showing that the market “is now ripe for a rebound, implying that we might see some form of bargain hunting” this week after the market was able to rebound on Friday.

The main PSEi ended on a positive note Friday as bargain hunters prevailed, following a series of dips. The benchmark index closed up 1.00 percent or 75.43 points to 7,580.46, while the All Shares climbed 0.83 percent or 36.02 points to 4,360.81.

AB Capital said the initial support is at 7,500. A breach below of this level indicates drops to the 7,200 to 7,250 territory. Resistance level, on the other hand, is at 7,650 and a break through this level “will allow the index to re-test the previous peak at 8,150.”

For his part, Jason Escartin, investment analyst at online brokerage 2TradeAsia.com, said: “There are opportunities in extreme pessimism. While we don’t completely rule out the possibility of gains… we expect sideways trade with downward bias. Plays at this stage may be stock-specific, particularly in well-managed firms with solid fundamentals. Check out technical gauges in defining your trading points.”

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