Window dressing to lift market

Window dressing is expected to pull the market up this week as investors continue to position on stocks believed to have room for growth, analysts said, over the weekend.

Stock portal 2tradeasia.com said energy-related shares may continue to dominate trading sessions early this week, given the market’s positive response to the Supreme Court’s decision on Meralco.

The Supreme Court ruled that Meralco’s unbundling petition is legal, a reversal from a Court of Appeals decision last July 2004.

"Being highly capital-intensive, the SC’s motion is a strong positive step in attracting increased investments that should help reduce power charges over the long haul. While we have underscored its positive impact on Meralco’s financials," 2tradeasia.com said.

Following the issuance of the ruling, Lopez stocks went up on expectations of Meralco’s complete turnaround as it provisioned more than P21 billion in contingencies (P5.9 billion in 2005 and P4.6 billion in nine months of 2006), pending the decision on the case.

"Given no more provisions next year, we estimate Meralco to be trading at an attractive six times to seven times next year’s estimated earnings. This translates to a relative PER valuation of at least P60/per share for Meralco," said AB Capital Securities’ Erwin Balita.

Expected to benefit from Meralco’s revaluation are First Philippine Holdings Corp., which owns a 17 percent stake in the power utility giant and Benpres Holdings which owns 46 percent of FPHC. 2tradeasia.com said the Supreme Court’s ruling is also expected to benefit companies tied to power/energy, construction and tollways operation, which are believed to be the economic engine drivers of growth for 2007.

Also to benefit are parallel sectors in property, banking and allied services (trade/port operations, business process outsourcing). "Provision of improved infra services are key to transporting goods, and would fasttrack formulation of satellite central business districts (CBD) in high-growth provinces," 2tradeasia.com said.

Investors are also expected to watch out for PNOC-EDC’s listing on Wednesday. The company offered its shares at P3.20 each share raising nearly P16.6 billion. "The issue trades at a slight discount to our basket of utility related stocks. Initial numbers point to a fair upside (based on relative PER valuation of today’s prices) of P3.93 per share," Balita said.

2tradeasia.com, however, said that while the market may continue to rise gradually in the next few sessions, any new political antics, or security issues that might crop up would affect market sentiment anew.

By Friday, Metro Pacific Investments Corp., the debt-free investment holding firm formed by Metro Pacific Corp. as part of its extensive rehabilitation program, will list its shares on the exchange under the symbol MPA. This company is seen to have better prospects given its recent victory for the right to run the water concession in the west zone of Metro Manila.

Having hit past the 2,800 level, the market is expected to test the 2,880 resistance this week. Immediate support is 2,800 while resistance is at 2,850 to 2,880.

Any aggressive rally, however, may be limited by results from the US Federal Reserve’s meeting on Dec. 12, as well as the OPEC ministers’ meeting in Algeria on Dec. 15, 2tradeasia.com said.