Uneventful week seen as market consolidates

Trading is expected to be uneventful this week due to a lack of fresh incentives to sustain bargain-hunting.

In its weekly online market report, BPI Securities said the Phisix may continue to consolidate at current levels. "Mood is more cautious as investors fear another steep decline in the prices of speculative stocks may prompt a similar selldown in the broader market."

AB Capital research head Jovis Vistan expects the market to move sideways with a downward bias with most stocks having reached overbought levels.

"Rotational buying from recent winners to select second-liners are likely to temper the market’s downside. We expect rotation to be orderly and healthy," Vistan said.

Rotational buying is anticipated to benefit certain stocks with good corporate earnings stories, analysts said.

Vistan said the composite index is seen to move within a range of 1,480 to 1,580. "Valuations are no longer cheap as the market has moved up a long way off its base. Most investors are still worried- that stocks have not delivered sufficiently positive guidance to justify the steep run-up in prices," he said.

Analysts said further rallies in the market might be capped by political uncertainties as investors continue to voice out their concerns of another movie actor taking the presidency. Action star Fernando Poe Jr. managed to escape from a disqualification case last week as the Commission on Elections junked the case against Poe, triggering some modest profit taking in the stockmarket and the foreign exchange market.

Investors are wary of FPJ’s lack of experience in government service and his close ties with former president Estrada.

Vistan said investors favor a victory by President Arroyo, hinging on her strong economic background. "Whenever it starts to appear as though Arroyo’s chances are improving, the market would usually run up," he said.

Last week, the Phisix closed at 1,560.02, up by 42.01 points or 2.77 percent week on week. Stocks were up almost across the board, with the major second liners providing the most excitement. Hopes of a merger between Philippine Long Distance Telephone Co.’s subsidiaries Pilipino Telephone Corp. and dominant mobile phone firm Smart Communications Inc. boosted the market.

While PLDT denied having such a plan, analysts said there’s still a possibility Smart may consider doing a backdoor listing via Piltel. They believe that a union will be consummated before August. Smart is mandated under its franchise agreement to list by August.

Apart from the possible merger, Piltel is projecting to make a turnaround in its financial performance this year with a net profit of P402 million. The company earlier projected a net loss of P3.33 billion in 2003. It incurred a net loss of P21.8 billion in 2002.

Ending higher last week were Petron, Megaworld, Meralco A&B, Filinvest Land, Metro Pacific, Music, First Philippine Holdings, PLDT, Equitable, San Miguel B and Ayala Corp.