MANILA, Philippines - Failing to sustain an upward move, local stocks are expected to turn in a lackluster performance this week with investors reluctant to make big moves amid a growing budget deficit and uncertainty about the global fallout from Dubai’s financial troubles.
Last week, the main composite index fell 23.76 points or 0.77 percent as global equity markets tumbled on fears of a widespread default after Dubai issued a shock call to suspend the debt of its key state company by six months.
“The PSEi faces headwinds next week as the local economy struggles and the government battles a burgeoning budget deficit. The development in Dubai will continue to unfold and might even worsen depending on how the world perceives Dubai World’s ability to pay its debts in six months time. The initial reaction has been a flight to quality and this does not bode well for emerging markets if it persists,” said Prince Anthony A. Yeung of AB Capital Securities Inc. over the weekend.
Yeung said the stock market has been unable to move higher and has been consolidating at around 3,050 points on disappointing economic figures.
GDP growth for the third quarter was 0.8 percent, lower than the government’s target of at least 1.6 percent. This was attributed to weak outputs from the manufacturing and farm sectors.
Some investors are expected to lock in profits with the PSEi already up by 62.58 percent since the start of the year.
The market is closed today in observance of the Bonifacio Day.
Stock portal 2tradeasia.com views any near-term correction as temporary, as fund managers set their sight on long-term economic recovery angle, especially early 2010.