WEEKLY SHARES OUTLOOK

Wary investors to stay on the sidelines

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Stock market investors are likely to stay wary this week given the scheduled release of domestic inflation and exports data, as well as the US jobless figures and details of the last US Federal Open Market Committee (FOMC) meeting.

BPI Asset Management said in a weekly review the Philippine Stock Exchange index (PSEi) would see “cautious and sentiment-driven trading, particularly depending on leads overseas.”

“The PSEi should trade between 6,700 and 6,900, with the main catalysts being the local inflation and export numbers, and further developments in the US and China,” it said.

For local releases, the September inflation result is due out on Tuesday, while exports data should be out on Thursday.


Jason Escartin, investment analyst at F. Yap Securities Inc., said investor sentiment is likely to be driven by the US jobless claims and the release of the Sept. 16-17 FOMC meeting minutes, both due on Thursday.

“Sentiment will glide with the latest jobless claims data in the US and the minutes from the Fed, both scheduled for release on the 8th. The minutes should give investors a deeper glimpse into the thinking behind the Fed’s recent interest rate decision, plus a guide for the next meeting toward the end of this month,” Escartin said.

“While a delay in the lift-off may superficially be seen as a boon for equities, it puts to question the strength of the global economy, particularly China,” he added.

On the domestic front, investors are worried over the extent of the government’s commitment to its budget target of boosting spending to an equivalent of 5 percent of gross domestic product.

“Wary investors have yet to see signs that the government is committed to its spending target in earnest. January to August data shows it has not met its P1.7-trillion spending goal, despite growing expenditures by 11 percent year on year to P1.44 trillion,” Escartin said.

“With a target of P2.559 trillion for 2015, the fourth quarter may prove to be a sprint to meet the remaining P1.1- trillion balance. Over the first eight months, the government has spent P180 billion on average. This implies a monthly average of P277.5 billion to be spent in the fourth quarter,” he said.

“Should this aim be achieved, the economy may get a lift beyond the seasonal bump-up for the economy,” he added.

In terms of technicals, the PSEi is seen accumulating some short-term gains.

The benchmark stock exchange index dropped on Friday despite gains in the US and Asian markets. It fell by 0.59 percent or 40.33 points to close at 6,850.61, while the wider All Shares index slipped 0.46 percent or 18.26 points to 3,957.19.

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