"We are not ruling out a modest year-end rally, but we can’t find any sufficient fundamental backing to a rally. Our last chance for a Santa Claus rally seems to hinge on Iraq," a report by the local investment portal PhilStock.net said.
The global community will be keeping a close watch on the Sadam Hussein-controlled Middle East nation after the United Nations set a Dec. 8 deadline for Iraq to account for its weapons of mass destruction, if they exist. Iraq’s compliance is seen as a major factor that could make or break the stand of the UN, led by the United States, in initiating an armed offensive against Iraq.
Manila stocks slid for the fourth consecutive week, last week even with the onset of the December rally season, when prices traditionally rise as mutual and pension funds plow-in additional money to their accounts and engage in year-end window-dressing schemes to record capital gains in their books.
"The stock market often rallies in December as investors look for investment channels for their bonuses, and as institutional investors such as mutual and pension fund managers dress up their portfolios in time for annual reports," Philstocks noted.
It added that some investors were left disappointed that the traditional rally hasn’t materialized and have begun to question whether such an uptick is going to happen this year as a round of downbeat economic reports were responsible for putting a ceiling above the market.
"A year-end rally needs to be backed up by improving fundamentals, which the market is desperately lacking. Couple that with recent downgrades made by major ratings agencies on the Philippines’ outlook and the result is a market not making enough headway," PhilStocks said.
At the close of a shortened trading week, the Phisix ended 15.47 points or 1.48 percent lower at 1,031.75.
"Caution might rule trades early this week, as investors heed for developments overseas," another report by 2TradeAsia. com, the investment website of F. Yap Securities, pointed out.
It said aside from the Iraq standoff, the world will be focused on the OPEC oil cartel’s Dec. 12 meeting to decide whether or not to raise their members’ oil output quota, which would impact on their selling prices.
"Amidst all these, we are looking at another selective trading session, although consumer-driven stocks are likely to provide support for the market as a whole," 2TradeAsia added.