Sideways trading seen for local stock market

MANILA, Philippines - Sideways trading is expected to continue in the local stock market with major individual and institutional investors in wait and watch mode amid escalating tensions in Libya and Japan’s nuclear crisis.

Last week, the Philippine Stock Exchange index fell 2.15 percent or 84.47 points to close at 3,839.88 as investors continued to worry over the protracted Libyan crisis and the possible fallout from Japan’s nuclear power plants.

 “The inevitability of resolving the two global concerns is not the question; rather it is the timing of such that sends jitters and uncertainties through the financial markets,” said Jun Calaycay of Accord Capital Equities.

Calaycay said the local market will generally continue to be short-termed with some knee-jerks reaction either and both ways depending on the nature of developments.

“The short- to- medium term impact of the Japanese experience and sustained tensions in Libya will most probably reflect on faster inflation, higher unemployment and possibly slower GDP for the first quarter. This will rub off and reflect on first quarter 2011 corporate results - not to mention additional pressures on the fiscal deficit,” Calaycay said.

The government will be hard-pressed to sustain the budget surplus recorded for January, Calaycay pointed out.

Calaycay, however, expects some investors to take advantage of bargain stocks with the first quarter about to end.

 “The concerted efforts of the G7 countries, particularly its intervention in the currency markets last Friday to stave off a rout of the yen and a ceasefire called by embattled Libyan leader Muammar Gaddafi after the UN Security Council affirmed a resolution to ‘use any and all measure necessary’ to address the crisis, eases some of the built-up concerns over the two issues that influenced trades last week,” Calaycay said.

PLDT was the biggest loser last week, closing at P2,038 as investors dumped the stock amid slumping markets overseas.

In the past week, investors had been drawn to DMCI Holdings and Semirara which will join the FTSE today.