PH SHARES WEEKLY OUTLOOK

Market to track Q1 earnings results

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Philippine shares are poised to trail the stream of first-quarter corporate earnings due out this week, anticipated to be favorable by the market given the “better-than-expected” results disclosed by BDO Unibank Inc. on Friday.

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“We expect the local equities market to trade between 7,850 and 8,030 [points]with an upward bias as companies start to announce first-quarter results,” BPI Asset Management said in its weekly market review. “We are expecting a mostly positive performance from the corporates as they benefit from sustained low oil prices and a low interest [rate]environment.”

The “Henry Sy-led BDO [has]kicked off the earnings season, reporting a better-than-expected performance due to trading gains,” it added.

On Friday, BDO announced its January to March net income rose 12 percent to P6.1 billion on the back of strong loans and deposits. The bank also set a profit target of P25.1 billion for 2015, led by both organic and acquisitions-related growth.

Besides corporate earnings data, the outcome of the US Federal Reserve’s meeting this week may also influence trading this week, analysts said.

Justino Calaycay Jr. of Accord Capital Equities Corp. said on Friday the market may be “bullish” again in the next few days after it went through a short-term correction that had pulled the benchmark index below the 8,300-point record territory and down to the 7,800 level.

“The first-quarter [earnings reporting]cycle is just about to begin as well, and if what BDO reported is any indication, we should [be finding]more reasons to be bullish,” Calaycay said.

“Once more — at least in so far as this [last]week’s eventual close indicates — the strategy of buying on dips and buying more on much deeper dips has proven to be profitable… Of course what happens next week is still up in the air but this is a worthy mental exercise to test the veracity of the earlier mentioned strategy,” he added.

Calaycay said investors will also wait for the US Federal Reserve statement on policy rates on April 30 and other important economic data across the globe.

“Markets will be tuning in on the language of the statement, [to see]if there has been any change since the ‘will go slow’ remark made in the previous meeting. In that statement and in statements following that, certain Fed officials, including the chairperson herself, have practically written off any prospect of a change in the rates at this meeting,” Calaycay said.

Among the important economic indicators likely to be eyed by local and foreign investors is US consumer sentiment (Tuesday, April 28), pending home sales (Wednesday, April 29) and the ISM manufacturing PMI (Friday, May 1.)

“The unfolding narrative of Greece will [also]continue to be on top of or near the headlines while the world keeps an eye on some geopolitical conflicts in the Middle East, a growing humanitarian/refugee crisis along the coast of Europe and China’s insistent flexing of its muscle in the East and Southeast Asian region,” Calaycay added.

On the domestic front, the market will also keep watch of some important data due to be disclosed next month: April headline inflation in the first week of May and first-quarter gross domestic product (GDP) in the last week of that month.

On Friday, the Philippine Stock Exchange index (PSEi) gained 0.70 percent or 55.20 points to close at 7,947.25, while the All Shares added 0.63 percent or 28.40 points to 4,547.12.

The local financial markets will be closed on Friday, May 1, in observance of Labor Day.

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