SONA will set trend for stocks


MAJOR listed firms will release their second quarter earnings reports starting this week, which will impact the market one way or another. However, investors’ focus today would be on President Rodrigo Duterte’s first State of the Nation address.

The main index is expected to take cue from the economic policy the president will unveil, says Victor Immanuel Felix, equity research analyst at AB Capital Securities Inc.

He also noted that considering that high valuation of most share prices and the P/E ratio of 23.5, a pull back cannot altogether be overruled.

“Investors are fully aware that the index is expensive, although some think it is justified given our high GDP growth, strong consumer spending,” Felix said.

With the present level of P/E Ratio share prices, he noted, are “technically bound to consolidate” and eventually settle down to around 20.

Justino Calaycay, the head of research and marketing at A&A Securities Inc., also spoke of the impact SONA could make. This is a chance to gauge whether the administration is putting money where its mouth is, he said.

By mid-week, the attention could shift to the US Federal Reserve’s meeting, though it does not seek likely that the Fed will make any move on the rates this time.

The benchmark Philippine Stock Exchange index (PSEi) had attained its 15-month high to 8,102.30, the highest level for the main index since April 10, 2015. But it eased to 8, 025.35 on Friday, while the broader All Shares index declined 47 points to 4,794.03. The average turnover also fell 2.21 percent to P8.65 billion. However, winners led losers at 102 to 95.

Net foreign buying dropped by more than half to a weekly average of P739 million.

“For the week, market will continue its bullish trend with the earnings of local companies shedding light on the economic picture of the second quarter. Also, a possible economic stimulus from BOJ [Bank of Japan] is expected, which would prop-up demand [for stocks],” said Aniceto Pangan, trader at Diversified Securities Inc.


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