SHARES WEEKLY OUTLOOK Lower on earnings, political worries


PHILIPPINE shares are expected to trade slightly lower this week on profit-taking as investors turn bearish following last week’s second-quarter GDP data release, the waning effect of corporate earnings, and renewed geopolitical tensions in Ukraine and Russia.

AB Capital Securities Inc.’s Alexander Adrian Tiu said in a weekly market outlook the Philippine Stock Exchange index (PSEi) may trudge a downward trail amid worries that the government may not achieve its full-year GDP target of 6.5 percent to 7.5 percent given the lower second-quarter GDP growth year-on-year.

Last Thursday, the government reported that second-quarter GDP grew by 6.4 percent, faster than the 5.6 percent growth in the previous quarter but slower than the 7.9 percent recorded in the second quarter of 2013.

“Despite higher-than expected numbers, fears that the government may not hit its forecast of 6.5 percent to 7.5 percent continue to dampen the bullish momentum. Given this, we see a continued bearish bias next week as the market continues to slow down as the effect from the earnings season wanes,” Tiu said.

BPI Asset Management agrees that the market would be on a downward trend this week due to profit-taking as global geopolitical issues weigh anew on sentiment.

“We expect the local equities market to trade between 7,040 and 7,176 next week with a downward bias as investors continue to book profits and as the geopolitical situation in Ukraine and Russia becomes a concern again,” BPI said.

“Catalysts for next week include the Consumer Price Index for the month of August. The CPI, an indicator of general inflation, can influence the central bank’s decision to ease or hike interest rates in the coming months,” Tiu said.

“On a technical basis, the immediate support at 7,100 failed to hold, opening the index to further downside at 6,950 next week. In the event that the main support level holds, we foresee the market moving sideways at the 6,950 to 7,200 range. Given this, investors are advised to remain on the sidelines and accumulate on further pullbacks,” he added.

Meanwhile, Jason Escartin of F. Yap Securities Inc. said that the market may move higher toward the end of the year as “investment plans and fiscal expenditures are quickened prior to 2015’s budget planning season.”

“Industries tied to services and manufacturing are likely to lead, and will trickle into listed firms within these categories,” he said.  “Immediate support is 7,000, resistance 7,150 to 7,200,” he added.

On Friday, the PSEi  ended down 49.81 points or 0.70 percent at 7,050.89, while the All Shares index slipped 35.65 points or 0.85 percent to 4,170.01.


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