PH SHARES WEEKLY OUTLOOK

Range-bound trading with a bearish streak

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Stock market trading will likely be range-bound this week as investors continue to await news from abroad, particularly indications of how next week’s US Federal Reserve meeting will turn out.

Investors, BPI Asset Management said in a weekly market review, will be “taking cues from international markets due to the lack of catalysts domestically. For this week, our expected trading range is 6,850 to 6,950.”

Jason Escartin, investment analyst at online brokerage firm 2TradeAsia.com, said the market would likely see a “bearish streak ahead of the Fed meet.”

A policy rate hike could be announced by the Fed following its December 15 to 16 meeting, he added, given data showing that the US economy has grown strong enough to withstand an increase.


The notion of a recovering US economy “may be greeted with mixed reactions locally,” Escartin said.

He added, “equities investors might wait for clearer affirmation on whether the global recovery is finally taking hold given the divergent policies in US and Europe. Specifically, players would want to check if policies from these industrialized economies could weigh on trade, remittances, international reserves and external debt, among others.”

“For now, increased financial volatility will be underscored, specifically for currencies and bonds, in view of the ECB’s (European Central Bank) stimulus measure versus the Fed’s tightening.”

Last Friday saw a global-selloff as investors were disappointed by a smaller-than-expected ECB rate cut, viewed as not enough to spur eurozone growth.

“Portfolio reallocation could remain high among foreign fund managers, as they check on markets’ mature acceptance of the Fed’s gradual rate hike, which will be balanced-out in terms of fourth quarter earnings kick, multiplier effect of remittances, plus expectations of improved consumer spending towards the run-up to May 2016 political race,” Escartin also said.

Lexter Azurin of Unicapital Securities Inc. and Jonathan Ravelas of BDO echoed the same sentiments, saying volatility will continue.

The local market will likely trade the 6,800 to 7,000 range, Ravelas said, adding that the PSEi should hit 7,100 to 7,150 to be able to claim a Christmas rally.

On Friday, the bellwether PSEi declined by 1.03 percent or 72.17 points to close at 6,921.93, while the broader All Shares index also decreased by 0.86 percent or 34.48 points to 3,993.23.

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