PH SHARES WEEKLY OUTLOOK

Sideways ahead of economic briefing

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Local stocks are expected to drift sideways this week as investors await market-moving news, particularly Tuesday’s economic briefing, to see if the benchmark index will retest the 7,400 level to a new all-time high or continue with its consolidation.

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The Bangko Sentral ng Pilipinas Investor Relations Office (BSP-IRO), which hosts the economic briefing twice a year, will update stakeholders about the current state of the economy on Tuesday. Some cabinet members, particularly the government’s economic managers, are expected to be present during the briefing.

Jason Escartin, investment analyst at F. Yap Securities Inc., said in a weekly outlook that the market will take cues this week from the global markets, end-of-quarter window-dressing activity, and the Philippine economic briefing on Tuesday.

“Position for the next terrain. Apart from overseas developments, this week’s highlights will include government planners’ economic briefing, specifically on directions that will be taken for 2015. Market watchers will heed for clues at the fiscal front, given the region-wide challenge for ‘gradual tightening’ in monetary policies,” he said.

“Having breached 7,413 intraday record [last week], this level would be re-tested as buyers consolidate at 7,200 to 7,300 points,” he added.

Escartin said he sees the market’s support level at 7,200 points while resistance is seen at 7,350 to 7,450 points. Justino Calaycay Jr., analyst at Accord Capital Equities Corp., said positive expectations for third-quarter corporate earnings results may underpin shares this week although the trend may be tempered by volatility.

“Traditional window dressing, as companies close their books for the three-month period ending September, should elicit some positive moves in share prices, but the overhang of last week’s by and large negative volatility adds a tempering force that could cap an advance,” Calaycay said.

“A further drop could boost bargain hunters’ appetite, particularly for blue-chip and index counters ahead of the third-quarter earnings cycle in the period bridging the end of October and mid-November,” he added.

Calaycay said the Philippine Stock Exchange index’s (PSEi) sudden retreat from the new intraday high is expected, as the market needs to undergo a correction.

“As the measure stays above 7,200 and PE [price to earnings ratio]remains elevated at 22 times, the flag of caution stays on top of the trading pole and puts pressure on the upcoming earnings season to produce numbers that will justify the optimism reflected in share prices,” he said.

Calaycay noted that if the PSEi experiences “less-than-expected results” this week, it may negate investors’ view and they may adjust their portfolios to “reasonable rates of return”, which may drag the PSEi to 7,000 by yearend.

“Alternatively, better-than-estimated results will introduce a fresh round of optimism for the fourth quarter and may serve as the jump-off point to rewriting the all-time record high ,which stands at 7,392.20,” he said.

On Friday, the benchmark index went down by 32.91 points or 0.45 percent to 7,261.30, while the All Shares index slipped 13.45 points or 0.31 percent to 4,301.45.

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