PHILIPPINE shares are expected to trade largely sideways in the next two months, with no positive catalyst seen to lift sentiment to break strong resistance at the 7,400 points level on the Philippine Stock Exchange
Rabboni Francis B. Arjonillo, president of investment bank First Metro Investment Corp. (FMIC), said local
equities are drifting sideways as foreign investors continue to be discouraged by global developments, mostly resulting in risk-off selling.
“We do not see positive catalysts for local equities in the next two months. If at all, the headwinds appear daunting,” Arjonillo said in the March issue of The Market Call, the monthly capital markets research publication of FMIC and University of Asia and the Pacific (UA&P).
“These include: 1) the strengthening of the U.S. economy and dollar and its negative effect on the peso; and (2) the economic fundamentals on the external side show some cracks as the current account looks headed towards a deficit as a result of years of an overvalued currency,” he added.
Generally flat last February with a 0.2 percent decline for the month, the PSEi was plagued by policy uncertainties the past few weeks due to the US Fed rate hike concerns, Arjonillo said.
Those uncertainties offset the gains made by select stocks on the back of good corporate earnings and strong domestic economic fundamentals.
With the Fed having hiked rates by 25 basis points in March and with no catalysts seen moving the markets anytime soon, the FMIC president said “the investing strategy remains the same” for the next two months, which involves “patience and search for value stocks particularly in the consumer, banking and energy sectors, as well as entry on market downturns.”
In February, the financial index led the gainers with a 1.5 percent gain followed by mining and oil (up 1.1 percent), and industrial and services (up 0.4 percent and 0.3 percent, respectively).
FMIC is the investment banking arm of the Metrobank Group, which is owned by businessman George Ty. It specializes in a wide array of services in the equity and bond markets and also publishes monthly and periodical reports and researches intended for followers of the capital markets.