WEEKLY SHARES OUTLOOK:

Risk-off stance to rule trade

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THERE is a chance the market will stay in consolidation especially if investors adopt a risk-off sentiment ahead of the Federal Reserve policy meeting this month, the single biggest market-moving factor that has kept funds creep-ing out of equities.

“The index has continued to tread within the 7,150 to 7,300 range as investors mull over the full year 2016 corpo-rate earnings releases while keeping an eye on developments regarding Trump’s policies in the US,” RCBC Securi-ties Inc. Research Analyst Anton Alfonso said in a market note.

“We may see this cautious stance persist in the near-term with the probability of a rate hike by the US Fed this month continuing to increase,” he added.

The Fed meeting on March 14 to 15 coincides with budget proposal of the Trump administration going to Congress.


Last week, foreign investors were net sellers as the market got a bit of frustration from President Donald Trump’s State of the Union address while bets on the likelihood of a Fed rate hike continued to rise.

This week, however, online brokerage 2TradeAsia.com said the market is “seemingly in an early mode of pricing-in the possibility of the Fed’s upward interest rate adjustment, which could lend further strength to the greenback and weakness in local currencies.”

The US jobs data and Philippine inflation will have an influence on fund flows from foreign fund managers. Until the Fed actions in relation to US economic figures are fully factored in, foreign funds are expected not to be on the buying side.

“More importantly, fund managers will take a look at other ‘boon or bane’ variables for specific sectors, especially after proposals were floated on the need to have Smart conduct an IPO in conjunction with the extension of its legislative franchise,” the online brokerage noted.

“Within the power sector, investors would also weigh the effect of the proposed carbon tax law, excise and VAT charges on coal prices, vis-à-vis alternative energy sources,” it added.

Until fresh catalysts arise to move the market in the in the coming days, consolidation is abound to be the trading play – as in range trading.

“The macro lift would definitely come from fiscal stimulus measures, one of which has been announced by Trump’s support for increased infra spending. At home, market watchers will heed President Duterte’s support for capital-intensive sectors, as well as his other economic roadmap that will help attract investments,” said 2TradeAsia.

On Friday, the PSEi rose 12.18 points or 0.17 percent to 7,247.12, while the broader All Shares gained 6.99 points or 0.16 percent to 4,385.86.

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