Weekly shares outlook

Sluggish trade as investors take a break, weigh 2017


Philippine shares are likely to enter a sluggish phase in the few trading days this week as most investors pull out some cash from the market for their holiday break.

Luis Limlingan, managing director of Regina Capital Development Corp., said investors are still likely to withdraw their funds from the market this week after the US Federal Reserve announced a rate hike this month and hinted at more rate increases next year.

Despite the market having dipped to oversold levels at the 6,500-point mark, some funds are set to exit the Philippine market during the last trading week of 2016, causing muted trading in thin volumes, he said.

“The trend would be more of the same as last week, on the pessimistic side, as funds are cleaning up their portfolio to prepare for 2017. But we’ll definitely see thin volumes as people are already in vacation mode,” Limlingan said.

Negative bias will stem from uncertainty over the full impact of more US interest rate hikes next year.

After the recent US Fed rate hike, “investors will speculate as to how many times the rates will be raised again next year,” he added.

Asked if the market is already in bear territory, Limlingan said the benchmark index will have to drop to the 6,480 levels, or 20 percent from the 8,100 high this year, and stay on or below that level for two months for the trend to show a bear market.

Online brokerage firm 2TradeAsia.com shares Limlingan’s view, saying he sees “no leads to spur growth” in the last three trading days of 2016 that can pull up the markets from its current 6,500-point level.

It was on January 28 this year when the PSE index last touched the 6,500-point level, closing that time at 6,507.22 as the market struggled to bounce back after being pummeled by concerns over a slowing Chinese economy and its repercussions on the global markets.

Participation in the market could be thin, given a three-day trading week. “A lack of local catalysts, within the region and in developed countries globally, could push the market sideways, possibly with a downward bias,” 2TradeAsia.com said.

The online brokerage firm said 2016 started on a “sour note” for the main PSE index due to China’s slower economic growth, and as 2016 comes to a close, “the focus will be on 2017 prospects, concentrating mainly on the US with the Fed’s early hint for three rate hikes, timed with the transition of a new administration.”

“With a lack of market catalysts, some stocks might buck the trend as players set their eyes on follow-through of some of the government’s pronouncements, particularly on heavily-regulated sectors. For now, investors should wait on the sidelines until clearer policies and regulations are released,” 2TradeAsia.com said.

“Furthermore, investors would want to focus on 2017 detailed plans of the current administration, especially now that the highest budget allocated by any administration (P3.35 trillion) has been signed,” it added.
It cited a trading range of 6,450 to 6,650 points for this week.

On Friday, the local stock barometer slipped 0.36 percent or 23.50 points to 6,563.67, while the All Shares index fell 0.62 percent or 25.18 points to 4,011.32.

Trading will resume on Tuesday, Wednesday and Thursday, December 27 to 29. Sessions are suspended for Monday and Friday, December 26 and 30, in observance of the holidays and Rizal Day, the PSE said.


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