Market expected to open on an upbeat mood

MANILA, Philippines - With the US markets ending slightly higher last week, local stocks are expected to open on an upbeat mood as investors try to resume their buying spree.

Last week, the main composite index twice hit the 4,000 level but succumbed to profit-taking Friday to finish at 3,979.35, up 76.79 points or 1.97 percent. The PSEi surged to record highs, mainly driven by the strong run-up in the share price of telecommunications giant Philippine Long Distance Telephone Co. which rose 4.9 percent to P2,524 apiece.

 Accord Capital Equities’ Jun Calaycay said while he remains bullish on the stock market’s prospects for the balance of the year, local stocks need to take a breather to sustain their general appreciation.

Trading activity was at a robust P7 billion worth of stocks per day, easily the highest weekly average so far this year.

 CitisecOnline head of research April Lee Tan expects the PSEi to shot up to 5,300 through next year on strong corporate earnings and liquidity as well as a favorable economy.

Even as share prices have risen to record levels, stocks remain under-owned, Tan said, pointing out that there’s much room for foreign buying,

“Foreign investors, which in the past accounted for around 70 percent of daily volume, currently account for only 40 percent of daily volume. Moreover, foreign investors only started to enter the market on a consistent basis in November of 2009, with very thin volumes of only P2 billion monthly.

Tan said the Aquino administration is expected to be the catalyst that will fuel economic growth as improvements in governance and implementation of economic reforms boost investor confidence, leading to higher investments.

Aside from PLDT, other issues that performed remarkably last week were Philex Mining, which gained 13.45 percent to P14 each as it announced it was looking at several new investments including the Tampakan mine; and Atlas Mining which surged to P14.78 apiece.

Megaworld and its parent firm, Alliance Global Group Inc. increased 11.27 percent and 10.83 percent, respetively on heavy foreign buying. Megaworld closed at P2.37 while AGI finished at P8.70 apiece.