Market faces another painstaking week

Expect the stock market to go through another painstaking week, with investors banking on the near-term resolution of the hostage crisis in Mindanao. The situation has been made more complicated by the closure of Urban Bank.

After ending the week on a year-low 1598.73 points, analysts said the market could consolidate within a tight range of 1600 to 1650 this week if no other destabilizing events occur that will further dampen investors' sentiment.

"We're keeping our fingers crossed that nothing else happens...the market has been subjected to a lot of battering rams, going back to the BW Resources scandal," said Irving Ackerman of I. Ackerman and Co.

Today, the new president of the Philippine Stock Exchange, Ramon T. Garcia, takes over, replacing Jose Luis Yulo whose three-year contract expired yesterday.

Ackerman said the appointment of Garcia -- whom he praised as a man of high integrity and solid experience -- would be a step in the right direction in bringing order and credibility back to the Exchange, which has suffered image problems due to the BW fiasco.

"Foreigners have looked at us af if we're a bunch of thieves," he said. "Maybe it's high time to correct that impression and restore investors' confidence in our economy."

Last Friday, foreigners were still on a net selling position, although considerably low at P36 million. At the height of the fund exodus this year, foreign fund managers have been unloading a net amount of about P400 million of their Philippine stocks.

Ackerman noted, however, that "these adversities make good opportunities for people to put in funds for long-term investments or even for speculators to bargain-hunt."

He said the depressed prices and oversold stocks could spark buying activities in such blue chip issues like Meralco, San Miguel, PLDT and Ayala Land.

Gonzalo Bongolan, reseach head of PCCI Securities and Brokers Corp., said that while the market has staggered over the past weekly trades, it has shown its resilience at the 1600 support level and will likely stabilize up to the 1650 mark.

"The Urban Bank crisis and the Mindanao conflict have spooked the market. Then there's the hike on the Bangko Sentral's key rates announced prior to an impending US interest rate increase in mid-May," he said.

On the positive side, Bongolan pointed out that the anticipated lower inflation figures in April as well as the rollback of oil pump prices could bring up market sentiment although he admitted the attention has been mainly focused on the developments in Mindanao and on the local banking front.

Government is set to announce the April inflation numbers on Friday, May 5. Estimates show the nationwide rate could be between 4.2 and 4.3 percent, at most a 0.4 percentage point increment from the March level despite an average 80-centavo oil price hike.

Weaker corporate earnings likewise weighed down heavily on mostly blue chip stocks. PLDT, the most actively traded issue during the past week, plunged P40 to P740 on concerns of lower first quarter results due to the integration of cellular unit Smart Communications and the continued losses of Pilipino Telephone Corp.

Petron Corp., ABS-CBN, Metro Pacific, Ayala Land and Ayala Corp. reported flat or lower earnings during the first three months.