PH SHARES WEEKLY OUTLOOK

Optimistic over earnings

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THE local market will likely be dominated by bulls in the next few days amid optimism over corporate earnings releases for the fourth quarter and for full-year 2014 along with other anticipated events such as the MSCI rebalancing announcement.

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Investors will also be keeping an eye on the central bank policy meeting on Thursday, with most players expecting the monetary authority to keep its key rates unchanged.

BPI Asset Management said in its weekly market outlook that the Philippine Stock Exchange index (PSEi) is still seen to go higher despite closing at an all-time high on Friday.

“We expect the PSEi to trade range-bound between 7,590 and 7,795 with a slight upward bias, lacking any major economic data and key events,” BPI Asset Management said.

“The index will continue to track overnight market movement in the US and more closely track markets in neighboring Asian countries. Investors would also be closely monitoring corporate earnings results,” it added.

AB Capital Securities Inc. said that for this week, expectations that the Bangko Sentral ng Pilipinas will keep its key rates steady during its policy meeting on Thursday, February 12, will be good for the stock market.

“The combination of a low interest rate and low inflationary environment is generally considered bullish for equities as it increases consumer spending and lowers borrowing costs for corporations,” AB Capital said.

“For next week, we still see earnings and dividends announcements as catalysts for the market’s movements as companies release their fourth quarter and full year earnings,” it added, noting the positive initial earnings figures from Globe, RFM Corp. and URC.

AB Capital noted that investors will also be on the lookout for the MSCI rebalancing announcement within the week on Wednesday, February 11.

With the benchmark index hitting an all-time high of 7,728.18 points last Friday, Anton G. Alfonso of RCBC Securities Inc. said that the market is expecting a further boost from the stream of corporate earnings results in the next few days given the good impression from Globe Telecom Inc.’s and Universal Robina Corp.’s (URC) profit releases.

“Index stocks such as Globe and URC have already released their earnings and have not disappointed expectations. As earnings season continues to gain steam, it will be interesting to see if the rest of the companies will be able to meet market expectations and hence support their relatively lofty valuations,” Alfonso said.

For his part, Jason Escartin of F. Yap Securities Inc. said the trend of the main PSEi is gearing towards 8,000 points due to the sustained buying momentum.

“We anticipate improved sector activity within the first half, as firms implement their capex initiatives. Mergers and acquisitions might be visible in financials, as institutions improve their liquidity ratio as part of regulatory compliance and to meet increased demand for loans. The same should spill over to property and tourism-related counters as overseas Filipino workers go long on property investments,” Escartin said.

On Friday, the main index hits its ninth record close for the year on positive news from the US markets and URC’s robust earnings. Friday’s close was higher than the last recorded closing of 7,716.06 on February 4.

On Friday, the benchmark stock index was up 0.70 percent or 53.94 points at 7,728.18, while the wider All Shares index went up 0.58 percent or 25.75 points to 4,496.74.

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