Market seen to enter consolidation phase

MANILA, Philippines - The local stock market will likely be in a consolidation phase this week given the absence of fresh leads as well as lingering concerns over Europe’s financial problem.

The main composite index climbed 1.47 percent week-on-week to close at 3,335.48 with sub indices in the green, led by the holdings index which reported a nearly four-percent growth. Aboitiz Equity Ventures Inc. rose 9.1 percent to P21 each share.

Accord Capital Equities Inc.’s Jun Calaycay said while the PSEi sustained its third weekly close above the 3,300 level, the aggregate value turnover in each of the six weeks have weakened from P39.92 billion to P14.46 billion.

“There are no major local leads that could move the local market next week. As a result, we may continue to look at external developments for guidance. Investors still have an eye on developments in Europe at the moment,” said AB Capital Securities.

AB Capital Securities said Europe’s sovereign debt crisis continues to weigh on market sentiment especially with billionaire George Soros’ pronouncement that the financial contagion might push the global economy back into a recession. 

“An extended rise in sovereign debt is seen to make credit more expensive and curtail investment and growth globally,” AB Capital Securities said. 

The World Bank has projected global growth at 3.3 percent in 2010 and 2011. In the US, the world’s largest economy is seen to continue growing in the second half of the year.  

On the local front, the Development Budget Coordination Committee (DBCC) expects the Philippine economy to grow by five to six percent this year with growth for the remaining quarters seen to range at between four percent to five percent per quarter. 

Calaycay said the market needs more positive  impetus to trade higher. “In the next two weeks this may take the form the quarter-end window-dressing and a surge of confidence when a new government takes over,” he said.

President-elect Benigno “Ninoy” Aquino  will take his oath of office and deliver the inaugural address on June 30.

Ovearseas, US stocks ended the week more than two percent higher amid optimism over the global economic recovery, but as Wall Street braced for a volatile week with a heavy dose of US economic data.