Market to consolidate as coup rumors persist, say analysts

The market will continue to consolidate this week as investors exercise a little caution given persistent coup rumors that are threatening the country’s improving outlook.

BPI Securities said the market may remain in consolidation as some investors may be on holiday due to the Lunar new year celebrations.

"The Phisix held support at the 2090 to 2100 range this is positive for the market. However, it still traded in a narrow range between 2103 and 2126, which indicates consolidation."

Last week, the main composite index rose 13.64 points or 0.65 percent to close at 2121.89 due to select bargain hunting after the government announced that the 2005 budget deficit was down to P146.5 billion, well below the P180 billion target.

AB Capital Securities said the market needs a fresh catalyst significant enough to attract more stock trades.

"The market has been moving sideways for almost four weeks now. It needs a fresh catalyst that is significant enough to stir stock prices from its current slumber. Consulting the PHISIX’s chart, one can see how the index advanced most rapidly on November 2, when the first leg of the expanded value added tax law was first implemented. It has since not looked back and is now trying to move to higher grounds. It remains to be seen whether the market can do a repeat performance with the increase in the value added tax rate this week," AB Capital Securities said.

Telecom stocks led gainers last week. Philippine Long Distance Telephone Co. (PLDT) rose P10 to P1,850 as it tracked the movement of its ADRs abroad. Also boosting demand for PLDT is a comment from an official that the telecoms firm will likely meet its profit target for 2005.

Banking stocks Metrobank, EPCIBank and Banco de Oro were also up. MBT added P0.50 to P30. BDO and EPCI, which are going through the process of a possible merger, closed at P61 and P36.50, respectively.

First Philippine Holdings Corp. closed unchanged at P49. The stock recovered after it dipped to an intraday low of P47.50 after the announcement that its sister unit First Generation Holdings Corp. cut the price of shares in its initial public offering to P47 per share, well below the targeted range of P51 to P62.

Philweb climbed P0.02 to close at P0.033 after it disclosed that ePLDT will acquire 20 percent of the company.

Property stocks Megaworld and Empire East also closed higher last week. Low interest rates and the strong dollar inflows boosted interest in the banking and property sectors.

BPI Securities said the market needs to close above 2,172 for the outlook to be bullish. A corrective move below the 2,090-2,100 range will likely be viewed negatively by the market.