MadePhilippine shares are seen trading higher this week following the market’s strong close on Wednesday ahead of the Lenten break, with sentiment bolstered by positive economic indicators.
“Unless certain negative developments surface, this momentum should carry over to next week as the market closes in on the first quarter earnings cycle roughly three weeks down the line,” Accord Capital Equities, Corp. analyst Jun Calaycay said.
He also cited the strong gross domestic product (GDP) forecast for this year and next as another factor that should boost Philippine shares over the long term, plus the fact that inflation has been kept under control, easing to 3.9 percent in March from 4.1 percent in February.
“It has been our contention that the strength of the domestic macro-economy should trump the negative influences sentiments borrow from abroad – not the other way around as a good number seemingly subscribe to. The evidences are in the numbers,” Calaycay said.
“Note that government targets a 2014 GDP pace of between 6.5 percent and 7.5 percent; inflation rate of 4.0 percent plus or minus1.0 percent; 7.0 percent to 8.0 percent export growth boosted in part by a slight weakening of the currency; and import growth seen at 10 percent,” he added.
On Wednesday last week, the Philippine Stock Exchange index (PSEi) closed higher at 6,671.18, up by 49.52 points or 0.75 percent. This was the record closing high for this year.
According to Calaycay, Wednesday’s stock market performance also marks the first back-to-back days that the index closed above 6,600.
“Investors took their cue from an extended rally in US stocks to push the local measure to a second day of advance, closing out the three-session week with gains of 0.4 percent,” he noted.
Philippine markets were closed Thursday and Friday in observance of Lent.
On Tuesday, positive global developments fueled buying in Philippine shares, helping the index close above the 6,600-mark after a two-day correction.