Philippine equities may trade sideways with a downward bias this week, as investors will be unwilling to take on extra risks ahead of the release of third-quarter earnings, analysts said.
Other factors triggering the market’s bearish mode include the elections in the United States next month, speculations that oil prices may rise, as well as expectations of a Federal Reserve rate hike by end of the year, they said.
“We should expect this sideways trend to continue until the third and fourth quarter earnings results of the companies start kicking in, which can encourage buying, depending on the results,” said Harry Liu, president of Summit Securities.
“For the US election, it will likely impact the global situation. If its Hilary [Clinton], the way I see it, it will be more of the same thing. Maybe even improved. Investors are already familiar, which can maintain the markets. If it’s [Donald] Trump, it’s not something I can say. He has an entirely different style which the market is yet to determine,” Liu added.
The main PSE index will probably be range-bound throughout the week at 7,500-7,700 levels, said Luis Limlingan, managing director at Regina Capital.
Last week, stocks jumped nearly 5 percent for two straight days on Tuesday and Wednesday, as investors were encouraged to pick some bargains on expectations that President Rodrigo Duterte’s four-day visit to China will improve trade and investment relations between the two countries.
The main index jumped from 7,300 to 7,700, though it settled at 7,600 at the end of the five-day trading week on Friday.
The absence of any buying incentives may drive the index downwards, Limlingan said.
Online brokerage firm 2TradeAsia.com said the US polls next month, rising expectations of a Fed rate hike in December, and the upward movements in the global crude oil prices ahead OPEC’s November 30 meeting in Vienna, will also prompt investors to be more cautions, driving stocks and the peso to a more volatile session.
“With almost 17 days left before the November 8 US elections, currency volatility may continue to run high in fund managers’ watch list, especially with rising expectations of a Fed rate hike this December. This is compounded by possible front-loading of greenback for import requirements this fourth, which might push up the local currency to P50 to $1,” 2TradeAsia.com said.
On oil prices, the brokerage firm said: “With crude futures hovering above $50 per barrel, the market is testing grounds whether this level will be a solid psychological support for crude prices, depending on whether or not suppliers will hold to their call to cap production. Talks are rife if supply-side pressure would come out as prices rise, or members might possibly uphold compliance . . . For now, all will be on a wait-and-see mode until details are ironed out in OPEC’s 30 November meeting in Vienna.”
Shares of local firms that have exposure in China, or whose top officials were part of President Rodrigo’s delegation during his state visit in Beijing, would be on focus this week. They include SM group, Megawide Construction Corp., Ayala Corp, Jollibee, Double Dragon, Metro Retail Stores Group, Aboitiz group, Filinvest, PLDT, Gokongwei’s JG Summit and Cebu Pacific, among others.
Investors will also be keeping an eye on central bank bank’s loans and domestic liquidity data scheduled for release on Friday, October 28.
The bellwether PSEi slipped by 0.82 percent or 63.10 points to 7,650.22 at Friday’s close, while the All Shares index also fell by 0.41 percent or 18.79 points to 4,518.11.