Market likely to maintain upward momentum

MANILA, Philippines - The local stock market is likely to maintain its upward momentum as investors expect upbeat second quarter earnings from listed corporations as well as other favorable economic data.

Last week, the main composite index closed 10.85 points or 0.32 percent higher at 3,426.95. The immigration to a new trading system and President Aquino’s first State of the Nation address failed to fire up investors due to weak markets overseas, particularly the US.

“For next week, the main drivers for the market will be the release of second quarter corporate earnings results and some key economic numbers like the second quarter US gross domestic product and July inflation,” AB Capital Securities said in its market report over the weekend.

Among the big corporations scheduled to release their earnings reports this week are Philippine Long Distance Telephone Co., Ayala Land, Metro Pacific Investments Corp., Globe Telecoms and the Aboitiz Group.

Inflation is seen to have inched up due to the effects of typhoon Basyang.

Sentiments in the US turned negative following poor quarterly results from Boeing and a worse-than-anticipated durable goods data.

“While there may have been a resurfacing of negative sentiments, it is highly unlikely for such pessimism to pull the index past its current level. Ergo, we maintain our bullish long-term reading on the market making it still a promising period to accumulate stocks,” Jun Calaycay of Accord Capital Equities Inc. said.

Conrado Bate, president and chief executie officer of Citiseconline, said any pullback should be viewed as chance to load up on growth stocks which have a strong tendency to outperform during this phase of the cycle.

“Focus should be growth rather than value. Growth will outperform given the diminishing uncertainty about the economic recovery,” Bate said.

Citiseconline chief technical analyst Juanis Barredo expects the index to end at 3,700 this year.

Barredo said stocks will continue to undergo gyrations as a result of the 14-month recovery rally since March 2009, with one major correction expected to take place in September or October.

“Range bound swings will continue as headwinds and doubts still linger.We, however, do not expect a double dip scenario but we can wtiness partial recovery pullbanks,” Barredo said.

CitisecOnline has recommended stocks that will directly benefit from higher consumer and investing spending — Metrobank, Security Bank, Megaworld, Filinvest Land, Ayala Land, Robinsons Land, Manila Water, DMCI and ICTSI.