Stocks to tread water as investors await SONA, key data

    Philippine stocks are expected to move sideways this week as investors await cues from President Aquino’s State of the Nation Address (SONA) on Monday to see what his game plan for the economy will be for the remainder of his term.

    Joyce Anne Ramos of AB Capital Securities Inc. and Jason Escartin of F. Yap Securities Inc. said in their respective weekly market outlooks that besides the lingering SONA effect the whole week, the market will also be on a wait-and-see mode ahead of corporate earnings results in the first and second week of August.

    “We believe that this waiting game will continue in the coming four-day week as investors will have to digest the content of President Aquino’s State of the Nation Address on Monday as well as wait for the release of the second-quarter corporate earnings,” Ramos said.

    “Should the earnings turn out better than expected, this will give investors the incentive to drive up the market. For the meantime, investors will most likely adopt a wait-and-see stance,” she added.

    Escartin noted that the market will also be watching for the outcome of the US Federal Reserve Open Market Committee meeting on July 29 and 30 and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on July 31 before taking positions.

    In addition, US GDP for the second quarter is set to be released on Wednesday (Thursday) in Manila. The US economy is forecast to have grown 3.2 percent in the quarter.

    Returning to the SONA, Escartin said the investing community is eager to “seek directions” from the president as to how the administration will resolve the issues surrounding the Disbursement Acceleration Program (DAP) and how key infrastructure projects under the public-private partnership (PPP) program are to be awarded and rolled out within Aquino’s term.

    Justino Calaycay Jr., analyst at Accord Capital Equities Corp., cited other factors why the market will be treading water in the coming days. These include the so-called Chinese ghost month, running from July 27 to August 24, release of July inflation numbers on the first week of August, and market expectations ahead of Philippine second-quarter GDP data due for release at end-August.

    According to Calaycay, the mentioned factors “may create some stir in the market going into the next and succeeding weeks.”

    “Hopefully, a flood of domestic data will be able to drown, or at least mute, the long-standing external influences that has tempered market activity and kept share prices inside a narrow range,” Calaycay said.

    “With this much potential impetus from the domestic scene, investors should find more reason to focus on the internals rather than simply borrowing hints from developments overseas to trade the market,” he said.

    “We are equally hopeful that liquidity will begin to pick up as we enter August — liquidity that will be sufficient to support the market’s foray into the 6,900 to 7,000 range,” he added.

    The Philippine Stock Exchange index (PSEi) was little changed on Friday, slipping 0.34 points or 0.005 percent to end the week at 6,889.55, while the wider All Shares index was up 4.71 points or 0.11 percent to 4,129.89.


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