Philippine stocks may trade within a consolidation phase following a recent bout of profit-taking, with investors set to look at the second quarter and first-half corporate earnings for fresh leads to power the market back on to the 8,000-point level.
Bryan Gomez of Citisecurities Inc. and Harry Liu of Summit Securities Inc. expect the consolidation phase to send the benchmark index between the 7,700 and 7,900 range while investors await the release of first-quarter earnings results this month, even as some of the figures have been priced in at this point.
“At the end of May, we see improvement coming in as investors start to anticipate the second-quarter earnings results, or the midyear reports, and also continuous government spending and the first leg of election spending coming into the picture,” Liu said.
Jason Escartin, investment analyst at online brokerage firm 2TradeAsia.com, said in a weekly market review investors are likely to stay on the sidelines biding their time to find a gauge to “settle at a firmer plane.”
Referring to the main index piercing 7,800 and then slipping back to 7,700 points, Escartin said contrarians may see that as providing a good chance to buy, “as brave players sift on headline feeds on the timing of the Fed’s rate hike,” he added.
The US Federal Reserve last week came out of its meeting giving no specific timing for a an interest rate hike, saying only that economic growth will continue to be moderate, which market watchers took as an indication the tightening may still be possible toward the end of the year.
Regina Capital Development Corp. Managing Director Luis Limlingan said the market may remain in a correction phase, trudging sideways as local stocks have reached an “overbought region.”
“For the next one to two weeks, we expect the index to consolidate between its 20- and 65-day moving averages break, which will, either way dictate its trend for the rest of the month,” Limlingan said.
Astro del Castillo, First Grade Finance Inc. managing director, said in that despite the market being poised to remain in a corrective phase, investors and fund managers are looking closely at the country’s economic fundamentals and may even find some upside when the market opens this week on the back of a 100-points surge on Friday in the Dow Jones Industrial Average on Wall Street.
“We see the market will be encouraged by the Dow Jones’ 100-point gain on Friday, which can trigger bargain-hunting [here]on Monday as the index [has already fallen]to the 7,700 level,” del Castillo said.
The US markets advanced on Friday, with the DJIA gaining 183.54 points.