Activity at the Philippine Stock Exchange is expected to be minimal given a shortened three-day trading week, analysts said, with investors waiting for new catalysts after companies wrapped up their third quarter earnings reports.
Not factored in their outlooks, released last Friday, is the likely impact of the weekend terror attacks in Paris, which is expected to test global markets already dealing with the likelihood of a US Federal Reserve rate hike and a slowing China.
“Investors will likely stay on the sidelines as we see a shortened trading week … with APEC (Asia Pacific Economic Cooperation) leaders coming in,” Angelie T. Wee of RCBC Securities Inc. said.
Trading and clearing will be suspended on Wednesday (November 18) and Thursday (November 19) in line with a government-mandated holiday. Tuesday (November 17) and Friday (November 20), meanwhile, will see regular trading despite government offices also being closed on those days.
“This week, we expect the thin volumes given the holiday caused by the APEC summit,” BPI Asset Management said.
“Markets will likely continue to fall and may test support level of 6,600, especially with the lack of local catalysts, as only OFW remittances figures will be released. US inflation figure to be released … may affect sentiment however. For this week, our expected trading range is 6,600 to 6,900,” it added.
Jason Escartin of F. Yap Securities Inc. said market players could take the occasion to review their portfolios after third quarter earnings results indicated slower growth for companies.
“With the nine-months earnings season winding down, players are seen to rebalance portfolios as some new themes emerge, replacing those that have run their course,” he said.
“Basic EPS (earnings per share) growth for PSEi (Philippine Stock Exchange Index) constituents averaged 9.11 percent, versus EPS growth in full year 2014 at 22.17 percent,” Escartin noted.
“This suggests earnings growth for full year 2015 has slowed, prompting players to heed catalysts that could ramp up momentum for 2016. Market participants are seen to stay selective, with the political spectrum in play for first half of 2016.”
Escartin said investors would also take in consideration the release of US inflation numbers on Tuesday, which could affect the likelihood of a Federal Reserve rate hike.
“The International Monetary Fund … [has]cautioned the US Fed to consider inflation data in its decision to raise the Federal Fund rate this December,” Escartin said.
“Unlike the labor market,which showed signs of tightening and spurred talks for a December increase, inflation has persisted below the Fed’s 2 percent medium-term target, suggesting more improvement in labor conditions should be seen before wages rise,” he added.
On Friday, the PSEi closed 12.05 points lower, down 0.17 percent, while the All Shares index declined by 0.72 percent or 28.78 points to 3,978.30.
Kristyn Nika M. Lazo