Mart seen staying in defensive mode

After the short calm that settled over the local stock market during the holidays, analysts do not expect trading to liven up in the early part of this year — at least until President Estrada’s impeachment trial is over.

"The market will maintain its defensive mode, with market participants not expected to make large positions because of the pending impeachment trial," Wise Securities research head Jose Vistan said.

Writing for PhilStocks.net, Vistan said trading will remain light as the market will continue to suffer from a low level of investors’ confidence.

"There’s just a lack of direction and anything can push this market in any direction. The market is going to need a catalyst to move it along, and that will come in the form of the concluded impeachment trial," he said.

PCCI Securities and Brokers Corp. research head Gonzalo Bongolan shared the same outlook, noting that the market "will be more of the same behavior" as last year, with volumes remaining thin and share prices continuing to be trapped in a broad but downward channel.

"Of course, a reversal is expected anytime the impeachment proceedings are resolved to the market’s liking," he added.

Vistan said after last year’s worries, the market is expected to set its eyes once more on the impeachment trial which is set to resume tomorrow after an 11-day break.

Rumors have been widely circulating that new witnesses from both the defense and prosecution are to be presented, but since either side has made no confirmation, "the only thing these rumors have achieved is to create more tension and uncertainties in the market," Vistan added.

Bongolan noted that a common strategy forming among market players goes as follows: If the Senate tribunal acquits the President, sell stocks and buy dollars; if a conviction is handed down, buy stocks and sell dollars.

However, he added that there is also the expectation that if an acquittal is decided, "some buying support for the market will be undertaken to create an impression of acceptance and approval."

"When the dust settles, reality will bite. Under a new administration, the honeymoon will last longer, but it will be challenged with tremendous long-term structural problems that will unlikely be resolved within its term of office. Under the present administration in an acquittal scenario, many expect tremendous unrest, and the buying support will be unsustainable," Bongolan said.

He added that in either case, a rally is to be anticipated but will be cut short when market interest fizzles as long-term considerations step in.

The Phisix ended the year 2000 at 1,494.50, down by 30.3 percent from 2,142.97 a year ago, making the local bourse one of the worst performing markets in Asia.

"It’s a year that many investors are happy to see end," Vistan said.