The country’s stock market is likely to sustain its strong momentum provided there are no surprises in global markets, as local investors position themselves for end-of-quarter window-dressing this week, analysts said over the weekend.
Jun Calaycay, head of research and marketing at A&A Securities Inc., in a phone interview on Sunday said that for the week ahead the local bourse should further build on its strong performance of the past few weeks, so long as investor sentiment is not spoiled by negative news from overseas.
“We expect that the uptrend bias on the local bourse would continue this week, provided that there are no surprises from the global markets such as the US and China. We have seen a decent increase in the PSEi [Philippine Stock Exchange Index], and assuming that there is no global economic news that is surprising to investors, we will continue to be strong,” Calaycay said.
During the shortened trading week, the benchmark PSEi added 53 points to close at 7,360 heading into the holiday break, a 0.73 percent gain on a day-on-day basis led mainly by the industrials sector, which added 1.59 percent, followed by holding firms gaining 1.02 percent and the financials sectors picking up 0.90 percent.
Total average value turnover weakened by 13 percent to P7.02 billion, with foreign investors being the net sellers at P352 million.
Winners still outnumbered losers, 95 to 88.
In spite of an overall positive outlook, Calaycay noted that with the US employment data and China’s manufacturing and non-manufacturing data all scheduled to be released this week, the Philippines’ stock market would not be completely immune to consequences from global economic news.
“In addition, as we end the first quarter this week, companies will be up for window dressing, meaning, they would review their equity holdings and probably make adjustments so as to make their respective balance sheets look better,” he added.
For the week, Calaycay said that the stock market will attempt to reach the 7,400-level on the upside, while 7,250 would be the support for the downside, in view of possible profit taking among prudent investors already realizing at least a 10 percent gain from their holdings.
Meanwhile, Jason Escartin, investment analyst at 2TradeAsia.com, suggested that stock market investors would be focusing on China’s manufacturing and non-manufacturing data as well as the US employment data, but downplayed fears of an extended Chinese downturn.
“Overall, while the country [China] is expected to experience short-term headwinds during its transition [from manufacturing based to service-oriented economy], it is perceived to possess the wherewithal to carry this out to completion and even avoid a dreaded hard landing scenario,” Escartin said.
Escartin also noted that US non-farm payrolls for the month of March would likewise affect the country’s stock market direction next week, which is the the start of the second quarter of the year.
“Another crucial piece of data due for release on April 1 [Friday] is the US non-farm payrolls for the month of March. Policymakers’ previous statements indicated that the condition of the labor market stands as one of the key determinants of a rate hike. The Fed’s [Federal Reserve] meeting in the middle of the month indicated that the labor market is seen to strengthen further,” he said.