Market vulnerable to correction

MANILA, Philippines - Local stocks are vulnerable to a correction given the overbought posture of market.

Accord Capital Equities Inc.’s Jun Calaycay expects softer market action after the main benchmark index reached new heights on bullish outlook on the country’s growth performance.

 Last week, the main benchmark index closed 1.75 percent or 93 points higher at 5,439.84 as offshore investors dominated stock trading, loading up on blue chips. The PSEi is up 24.43 percent year to date.

 “There are some concerns that the PSEi may have extended itself too much, too soon. Last week, it registered its 22nd and 23rd record close for the year. The easing last Friday may be a prelude to a much-awaited correction that should open doors for another round of purchases,” Calacay said.

 Calacay said Eurozone woes would continue to weigh on the market. “Europe remains a big question mark. Fears of a contagion surfaces from time to time even as pessimism is tempered by the readiness of the European Central Bank to provide aid to economies prepared to meet its conditions,” he said.

 Investors are expected to keep a close watch on two key economic indicators due for release this week – foreign direct investments for July and merchandise export performance for August.