PH SHARES WEEKLY OUTLOOK

Positive as ghost month ends, ‘ber’ months start

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PHILIPPINE shares are expected to go on rallies as August, which the market believes is a ghost month, becomes a thing of the past and the “ber” months usher in buying opportunities in consumer stocks.

Jason Escartin, investment analyst at F. Yap Securities Inc., said in a weekly note that there are more market plays in the consumer segment despite the presence of volatilities in global markets.

“As the country drives into the “ber” months, opportunities in consumer sector may merit a closer look. With household consumption comprising two-thirds of the local economy, the seasonal uptick may bode well for consumer-related shares,” Escartin said.

“Meanwhile, probe closely on input charges, especially those that rely heavily on imported items,” he added.


However, the medium-term technical trend for the PSEi remains uncertain as it trades below the 30-, 100- and 200-day moving averages, Escartin noted, citing how August ushered in the “deepest foreign sell-off for the year at P17.65 billion.”

Year-to-date, net foreign selling already reached P8.92 billion, outpacing the net foreign buying of P8.7 billion as of end-July. Escartin said investors are likely to trade cautiously within a trading range of 7,000 to 7,300 points this week.

BPI Asset Management, on the other hand, said in a weekly review that the equities market is set to perform based on domestic inflation figures and US developments.

“This week, we expect continued cautious and sentiment-driven trading. The PSEi should trade between 6,850 and 7,200 with the main catalysts being the local inflation number and further developments in the US.”

Anton Alfonso, RCBC Securities Inc. research analyst, said the positive catalysts are likely to continue boosting the market this week and leave behind the losses incurred from the uncertainties in China’s equities.

“The past week was a rollercoaster ride as global investors were rattled by the swings in the Chinese market. Thankfully, both Wall St. and the local bourse recovered from Tuesday onwards on the greater likelihood that a US Fed rate hike will not happen in September and by the strong second quarter GDP [gross domestic product growth]in the US and the neutral GDP results for the Philippines,” Alfonso said.

Last week, the Philippine Statistics Authority reported that the second quarter GDP grew by 5.6 percent, up from the first quarter’s 5 percent but down from 6.4 percent a year-earlier, to hit the low end of analysts’ forecasts between 5.6 percent and 6.8 percent.

The US GDP grew at an annual rate of 3.7 percent in the second quarter, which is much higher than the estimated 2.3 percent after firming up at 0.6 percent in the first quarter.

Because of the better-than-expected US economy, Wall Street went into a series of bounce backs throughout last week, with the Dow Jones, S&P 500, and Nasdaq recording 2 percent to over 3 percent gains.

“We expect the PSEi to continue its rallies this week, testing the resistance levels at 7,100 to 7,270 but keep in mind that the recent breakdown put a lot of selling pressure and together with high volatility readings, taking a very cautious approach is advised during this week’s trade,” said Luis Limlingan, managing director at Regina Capital Development Corp.

Based on technical readings, Regina Capital expects the market to consolidate in search of a strong support base.

“Issues trading above the long-term averages (especially between the 200- to 260-day moving averages) are good buys this week. On the other hand, issues trading below these averages are given a “sell on rallies” recommendation,” Limlingan said.

The Philippine Stock Exchange is closed for a national holiday on Monday, August 31.

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