Philippine shares are facing two potential market-moving news this week: the President’s last State of the Nation Address (SONA) and the latest economic data from the US.
While there is a likelihood of a volatile week for the stock market, participants are also divided over how the trading would go.
Jason Escartin, investment analyst at F. Yap Securities, said in a note that President Aquino’s last SONA today is at the top of the list and that the investing community will wait keenly for his annoucement on who will be his anointed presidential bet for the 2016 elections, as well as fiscal spending, the Bangsamoro Basic Law, and the strategy toward resolving the territorial spat with China.
“These are crucial for investors in prudently weighing the associated political risks in store for the Philippines, primarily because of the impending leadership change in 2016,” Escartin noted.
The latest economic data from Washington, particularly the second-quarter GDP data, may also cause some volatility, as the numbers will dictate how the US Federal Reserve will respond via policy tweaks.
“Investors may have a reason to curb their optimism as the Fed decides on an impending interest rate hike, widely seen this September. The initial stigma of a sooner-than-expected rate increase might dampen appetite for equities, but diversification should propel fund managers to optimize returns,” Escartin said.
However, in a weekly outlook, BPI Asset Management has a more optimistic take on how the market would trend. It expects an upward bias despite the general sentiment that the US economic data will mainly drive markets this week.
“We expect the PSEi to trade between 7,531 and 7,731 with an upward bias,” BPI Asset Management noted in the report.
The benchmark index was up 12.30 point or 0.16 percent to 7,665.52 on Friday, while the All Shares advanced by 5.62 points or 0.13 percent to 4,374.15.