Shares likely to remain flat as outlook not exciting — analysts

Lackluster trading is expected to ensue in the stock market this week as investors continue to guard improvement in corporate earnings and seek guidance overseas, analysts said.

Investors are also seeking clues on the listing of First Generation Holdings Corp.’s shares in the stock market and the pricing for Universal Robina Corp.’s primary and secondary share sale.

"Outlook for the market is unexciting with the Phisix moving within the narrow 70 point range. And although it’s too early to tell for sure, it is beginning to look like the buying enthusiasm many traders have had is fading. That could well keep the market treading water for a while," AB Capital Securities said in its weekly market report.

"In terms of market moving news, the market has only the latest trade data and the January inflation report to look forward to. We are not expecting many market moving news items from these events," AB Capital Securities further said.

Last week, the market rose 16.82 points or 0.79 percent mainly on positive news of strong gross domestic product (GDP) performance in the fourth quarter, stronger 2005 earnings for banks and the implementation of the VAT rate hike to 12 percent.

The country’s GDP grew 5.1 percent last year, lower than the six percent recorded in 2004 due to weaker farm output and high oil prices. While the figure was below the government’s pronouncements of an economic 5.3 percent expansion, the actual figure was above market expectations of between a 4.7 percent to five percent growth.

BPI Securities said the implementation of the VAT rate hike boosted confidence that the government will raise enough revenues for its expenditures and trim its budget deficit.

AB Capital Securities, however, said the market may continue to meet some resistance near the 2,170 level and that a pullback to around 2,100 may take place in the short-term.

AB Capital Securities said that while some corporate results for 2005 are to be released, investors are now more interested in the earnings outlook for 2006, which is clouded by the recent increase in the value added tax rate and the jump in energy prices. These inflationary issues will raise concerns about corporate profits and the ability of companies to control prices.

There was profit taking in the last session of last week, spurred by news that the Supreme Court (SC) nullified the rate hike granted by the Energy Regulatory Commission (ERC) last June 2004 to Manila Electric Co. and on news of weakness in the US markets.

The Lopez Group suffered declines in their share prices. Meralco A fell P0.25 to P13.75 while the B shares dropped P0.75 to close at P20.75. First Philippine Holdings Corp. lost P1.50 to P47 while Benpres Corp. shed P0.02 to P1.04.

Philweb Corp. also fell P0.003 to P0.03 after announcing that it cannot close a deal yet with ePLDT, the Internet arm of the Philippine Long Distance Telephone Co. (PLDT), as the price for the acquisition of a 20-percent stake in the listed internet firm is still being finalized. Metrobank was up P2.50 after announcing that it posted a net profit of P4.36 billion in 2005 or higher than the 2004 figure.

PLDT reached an all time high of P1,895 a share last week on news that it may have exceeded its profit target in 2005 of P30 billion. Official results are about to come out on Feb. 27. PLDT has now increased nine-fold from its lowest point of P209 a share back in October 2002.