Wall St bloodbath seen to spill over to local bourse this week

With a short trading week ahead of the traditional Lenten holidays, the local bourse is expected to further fall into a deep slumber following the steep drop in the US markets last Friday.

Analysts said investors are likely to stay in the sidelines ahead of the long weekend, although there could be some positioning and accumulation of selected blue chips by institutional investors like pension fund SSS picking on bargain issues.

"The market is expected to move sideways as we see the US market consolidate following steep declines," Wise Securities research head Jose Vistan Jr. said.

Wall Street stocks suffered the worst one-day drop at 5.6 percent last Friday while its technology-laden counterpart Nasdaq plunged deeper by 9.6 percent.

Vistan said thin trading would continue to characterize market activity this week with the 30-issue Philippine Stock Exchange index (Phisix) moving within a narrow range.

PCCI Securities and Brokers Corp. research chief Gonzalo Bongolan said the market standstill could be linked to the traditional Lenten slowdown, with no compelling reason for the market to move.

He said the Phisix could move within a tight range of between 1675 to 1750, as local punters continue to dominate trading while the volume-heavy foreign funds await better prospects. Foreigners have been net sellers at the stock market over the past months, although there have been several instances of moderate foreign net buying during the past two weeks.

But Bongolan said the market has been generally moving, although on a slow pace, upwards since the Phisix touched a 17-month low of 1602.96 points last March 13.

"What we're seeing now is a market that is convinced the economy is fundamentally sound, with economic and business outlook improving," he said.

Vistan echoed this sentiment, voting that except for political jitters, the country's macroeconomic picture has improved. Investor shave realized that the economic numbers were not as bad as originally thought."

Government's release of soft inflation figures for March and perked up import levels have boosted the possibility of attaining the targeted 3.5- four- percent GDP growth levels this year.

Despite a four-day downtrend that halted a similar four-day upswing, the Phisix managed to hover above the 1700 mark as it closed at 1712.54 points last Friday.

Bongolan said with foreign funds on the sidelines, the market would again be focusing on the second and third tier stocks that include Internet firms and gaming stocks.