• PH SHARES WEEKLY OUTLOOK

    Typhoon’s impact to dictate market direction

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    MARKET direction this week is expected to be largely dictated by the outcome of Typhoon Ruby (Ruby (international name: Hagupit), with stocks also seen trading in a tight range ahead of a central bank monetary board meeting on Thursday.

    Justino Calaycay Jr., Accord Capital Equities Corp. analyst, said in a weekly market report that stocks this week will take their cue from the scale of devastation brought by Typhoon Ruby, with consumer plays in focus depending on whether they would be greatly affected by the calamity or will continue their bullish growth outlook as Christmas holiday spending kicks in.

    “With the weekend filled with ‘weather’ uncertainties, it is rather difficult to forecast what its impact on investors’ perception will be when trades resume Monday. Any news of devastation as ‘Hagupit’ lands on the eastern seaboard will surely bring forth memories of Haiyan — alongside its eventual impact on the economy. Note that the slower GDP [gross domestic product]number this year has in part been attributed to the damage wrought by Haiyan,” Calaycay said.

    Despite the negative sentiment brought about by the typhoon, Calaycay said the traditional market surge during Christmastime will be tested, adding that the yearend will be “on the side of the bulls.”

    “We may still see a spillover of the sell-off at the beginning of the week, but this should induce buyers to take advantage of what history suggests — a rally of 1.3 percent to 1.9 percent going into pre-Christmas trades,” he said.

    On the other hand, BPI Asset Management said in its weekly forecast that the market will likely trade in a tight range of from 7,150 points to 7,330 points “as investors reassess their positions in anticipation of the BSP’s [Bangko Sentral ng Pilipinas’] monetary board meeting” this week.

    For his part, F. Yap Securities Inc. investment analyst Jason Escartin said that Typhoon Ruby’s impact would largely be on the agriculture sector and that any resulting weakness in the economy can be offset by the services and manufacturing sectors.

    The economy may be exposed to disasters and unwanted spikes in prices once again, but Escartin said the overall sentiment is on the positive side as most firms are on an expansion mode.

    “Long-term inclining trend is intact. The market’s overall technical trend is still positive, with 7,350 points to 7,400 points likely to be retested. Consolidation within 7,200 points to 7,300 points will provide stable plane to support sequel run-ups, as the market accommodates new hands,” Escartin said.
    “Meanwhile, declines below 7,200 points should still be monitored, as this could drag gauges near the 7,000 points territory,” he added.

    “We anticipate liquidity to gradually improve, especially with the seasonal influx of remittances for December until early first quarter 2015. Several are likely to join the window-dressing bandwagon, given relatively pale returns from fixed income instruments, plus build-up in expectations for benchmark borrowing rates to stay low. Portfolio choices will stay selective overall, with special interest in stocks that will provide maximum capital gain potentials,” Escartin further said.

    The market’s immediate support is seen at 7,150 points to 7,200 points, while resistance is expected at 7,270 points to 7,300 points this week.

    The Philippine Stock Exchange index (PSEi) ended down 69.29 points or 0.95 percent at 7,230.56 on Friday on worries about upcoming Typhoon Ruby, while the All Shares index was also down 37.90 points or 0.88 percent at 4,250.

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