Share prices seen to consolidate at lower range

The market is likely to consolidate at a lower range this week as lingering political uncertainties and renewed concerns on terrorism continue to spook investors, analysts said.

After drifting at a narrow range for more than a month, the local equities market turned sharply lower after terrorist bombings abroad and domestic political issues dampened investor interest. The main index closed at its lowest this year to 1,423.79, down by 47.86 points or 3.3 percent week-on-week.

Prior to the sell down, investors have already been trading on a cautious note ahead of the May 10 national elections.

Analysts said the market remains vulnerable given the lack of new positive developments and the weakness in US markets.

In its weekly online market report, BPI Securities said: "Investors are likely to stay sidelined given the recent security developments abroad. Already, government fears a major terrorist attack may be imminent in the country and has asked its neighbors for information. Renewed fears of international terrorism have set a tone of uncertainty not only locally but also abroad."

AB Capital Securities research head Jovis Vistan said attention will be focused on developed capital markets like the US, especially how authorities will address the recent bombing in Madrid.

"The recent bomb blasts in Madrid are likely to remain fresh in the minds of investors. Investors will likely look at the international markets for guidance," he said.

Vistan said if the main index fails to bounce back to the 1,430 support level, the next support level will be at the 1,400 psychological level followed by the 250-day moving average level of around 1,350.

He advised investors to take profits and shift their money into more reliable, defensive sectors of the market like consumer stocks, which are likely to benefit from the upcoming elections.

RCBC Securities, on the other hand, expects a technical rebound in the coming trading sessions. "Bargain hunting will set in once again as support prices for a number of blue-chip issues are reached. However, the concerns – geopolitical and election-related – will keep investors on a trading mode tucking in earnings as they realize some short-term gains," RCBC Securities said.

Another factor that could undermine investor sentiment is the possibility that the Philippines could be officially removed from the investment list of the California Public Employees Retirement System (CalPERS).

CalPERS was advised by Wilshire Associates Inc. to sell its $67-million worth of Philippine shares. In it’s website, Wilshire said that its final analysis showed that the Philippines’ score remained below the two-point cut-off to qualify as among the permissible investment sites for CalPERS.

Local political developments added to the market’s woes last week. Leading Presidential candidate Fernando Poe Jr.’s statement that he would consider a restructuring of the country’s sovereign debts should he win the presidency rattled investors.

Bangko Sentral ng Pilipinas Governor Rafael Buenaventura said that Poe should clarify his position on the country’s debt problem, as his comment may be misinterpreted as a call for debt repudiation.