Market seen range-bound this week

MANILA, Philippines - The local stock market may show range bound movement with an upward bias this week, buoyed by traditional quarter end-window dressing.

Accord Capital Equities Inc.’s Jun Calaycay said the main benchmark index may tread the 5,230 to 5,300 band assuming there are no drastic drops in overseas markets.

“Traditional quarter-end window dressing may provide some impetus to trades in the week ahead.  It would not be far-fetched to see the index attempt to restore the 5,300 mark,” Calaycay said over the weekend.

The Philippine Stock Exchange index (PSEi) fell 30 points or 0.57 percent last week to close at  5,292, led by the  mining/oil and services counters.

The market is likely to open in positive territory, fueled by additional stimulus from the Federal Reserve as well as positive news from Europe.

The European Central Bank has mapped out a new bailout plan to help cap the borrowing costs of heavily indebted euro zone members.  The plan will be presented on Sept. 27  

Calaycay, however, noted that Greece still has to come up with a budget legislation that will satisfy all members of a shaky coalition which include groups or parties opposed to drastic cuts in pension, benefits and wages. 

“This austerity budget is a key for the economy to access bail-out funds  made available by the EU’s rescue facility.  The road may have been paved, yes, but its users will have to be willing to pay the price,” Calaycay said.

Italy and Spain are having second thoughts whether to utilize the facility and aid their respective banking systems. 

“We have always been confident that the worst may be over for the region, but the intermediate period will continue to see sudden shifts in outlook to negative and keeping investing risks elevated,” Calaycay said.

Investors are also keeping close tabs on the escalating tensions between Japan and China, and in the Middle East as well as China’s slow economic growth pace.