WEEKLY SHARES OUTLOOK

Q4 earnings to support market after solid GDP

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The Philippine stock market may gain support from investors taking positions ahead of the release of some fourth-quarter corporate results this week while market sentiment remains buoyed by last week’s solid economic growth story for 2016.

2TradeAsia.com cited the 6.6 percent GDP growth rate in the fourth quarter of last year and full-year 2016 expansion of 6.8 percent as providing strong support to investor sentiment.

“Having 6.8 percent growth for full-year 2016, investors will wait how the numbers translate to earnings growth, to sustain the country’s high rating. As Duterte’s administration ramps up infrastructure plans, the market might take the opportunity to fully digest the propensity of policies coming into fruition this year,” 2TradeAsia noted.

“However, we still need to remain vigilant as concerns about global risks in terms of US trade policies, shifts in administration and UK’s exit continue to seed uncertainties,” it added.


The Philippines may also benefit from the withdrawal of the US from the Trans-Pacific Partnership (TPP) trade deal and the potential ratification of the Regional Comprehensive Economic Partnership (RCEP), as China is speculated to take the US spot as the world’s business and economic leader.

“In essence, with the Philippines latest pivot to China, we can look forward to positive trade relations that could really benefit the economy and promote comparative advantage in terms of trade,” the online brokerage firm said.

However, trades may be thin as Chinese investors take time out to celebrate the Lunar Year until February 15, it added.

Corporate earnings, with investors looking forward to positive 2016 results, may encourage a new round of positioning in select issues.

“The fourth-quarter 2016 earnings cycle should provide the market with some cheer this week,” Justino Calaycay Jr., head of research and marketing at A&A Securities Inc, said in a weekly note.

“This attention to corporate fundamentals should take investors’ attention away, at least temporarily, from externalities as well as some domestic issues,” he added.

The shift in US trade and foreign policies, the Duterte administration’s slower-paced growth strategies and agenda proportionate to its campaign against illegal drugs and the peace and order situation are among the market-moving developments Calaycay noted.

Sooner or later the market may retest the 7,400 resistance on the PSEi due to the overall positive outlook, said Luis Limlingan, director and research head at Regina Capital Development Corp.

But it won’t be an easy climb which would require a 9-10 percent gain from last month and could trigger profit-taking, he said.

On Friday, the bellwether PSEi closed practically unchanged at 7,333.67, up 0.01 percent or 1.03 points. The wider All Shares also inched up by 0.09 percent or 4.01 points at 4,414.90.

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