Stocks likely to continue on their volatile course

MANILA, Philippines - Local stocks will likely continue on their volatile course this week, sparked by concerns about a weakening global economy.

Last week, the Philippine Stock Exchange index (PSEi) closed 34 points or 0.79 percent lower at 4,305.56.

The market will be closed on Monday and Tuesday in observance of the National Heroes Day and the Feast of Ramadhan, respectively.

 “The two-day holiday next week increases the chance of a big move when trading resumes on Wednesday. With a prolonged weekend, investors and markets will be unable to react to events abroad.

The highlight for this week is the much-awaited speech of Bernanke. There are hopes that Fed will resume another round of QE3 or some form of monetary measure to prop up the US economy and boost the stock markets’ performance. Whether such policy will be implemented or not, markets are expected to remain volatile,” said AB Capital Securities.

AB Capital Securities said Philippine Long Distance Telephone Co. (PLDT) and Lepanto Consolidated Mining (LC) will be the stocks to watch out for this week due to their respective corporate developments.

LC stocks reached a new high of P1.82 on Aug. 24 (Wednesday) after rallying from last week’s P1.41 on speculations that the Gold Fields group of South Africa, the fourth largest gold producer in the world, will likely exercise its option to acquire a 60 percent interest in the Far Southeast gold and copper mine of the company. Gold Fields has 18 months to exercise this investment option and proceed with a drilling program for the Mankayan mine.

“It should be an interesting week for PLDT after the the telco giant’s proposed deal with the family of tycoon John Gokongwei involving the sale of the latter’s 51.5 percent stake in Digital Telecommunications Philippines Inc. failed to secure the approval of the National Telecommunications Commission last Friday (Aug 26), the deadline set by the two firms for the closing of the transaction,” analysts said.

The original closing date was targeted for June 30 but was twice extended - to July 30 and then to August 26 due to NTC’s failure to act on the proposed transaction.

PLDT has already obtained the Securities and Exchange Commission’s confirmation of the valuation of the Digitel shares, and convertible bonds and advances which the telco giant will acquire in consideration of new shares of common stock to be issued by PLDT.