Market seen to continue upward trend this week

Local stocks are expected to sustain their uptrend this week on follow-through buying seasonal quarter ending window-dressing, and improving economic and corporate prospects.

Last week, the Phisix which will be renamed PSEi by April 1 gained 2.7 percent to close at 2,208 points, its highest level since August 1999. News of a lower budget deficit buoyed market sentiment.

The Department of Finance announced last week that the government’s budget deficit reached P25 billion in February, lower than the projected P27.2 billion. This was attributed to improved revenue collection, partly because of the implementation of the 10-percent EVAT last November, coupled by a further two-percent hike in February.

"This upward trend is likely to continue, albeit with increasing volatility. The upcoming Easter holidays may dampen investor accumulation with profit-taking expected ahead of the long holiday break," BPI Securities said.

"The market has been consolidating since last year and the break of the 2,200 psychological resistance suggests strength. The next resistance range is 2,270 to 2,300. The Phisix, however, needs to sustain the break of 2,200 level next week to suggest strength at this level. If it closes below 2,200 next week, this might mean the market needs to consolidate between 2,172 and 2,200," BPI Securities further said.

Jerome Gonzalez, head of research and strategist at PhilEquity Fund Inc., said regional flows will continue with banking and property issues as the major beneficiaries.

Megaworld last week finalized the terms of its international offering up to 3.72 billion common shares to foreign investors and up to 196.15 million common shares to local investors. Up to 588.47 million common shares will be available under an over-allotment option. This would translate to potential proceeds of between P5.4 billion to P6 billion for the company, which it can use to fund its growing list of projects.

Empire East Land Holdings Inc., the low-to-middle income housing unit of Megaworld, caught investors; attention last week, gaining 30 percent to close at P0.65 (high of P0.67), a 6-1/2 year high.

The renewed interest in Empire East was due to the board’s approval of a share buyback program of up to P1 billion over a two-year period.

The buyback program is intended to create and enhance value since the current price is not reflective of Empire East’s true worth. At current close, Empire East is trading 70 percent below its estimated book value of P2.13 per share, AB Capital Securities said.