Market seen to normalize

MANILA, Philippines - Investors will be on the lookout for bargains as the stock market aims to build a steadier footing in the coming days.

A normalization is also expected following the “overreaction” to the possible pullout of the US Federal Reserve’s stimulus program, a Philippine Stock Exchange (PSE) official said.

“Expect the market to range between the 6,000-6,500 levels in the week ahead,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

“Should the rally continue and break the 6,750 levels, this could push the bulls back to play,” Ravelas said.

Week-on-week, the PSE index rallied 4.8 percent or 283.11 points to end at 6,465.28. It was the first weekly gain for the snapping a five-week decline.

“Trading last week continued the bearish trend since May 23 but bargain hunters returned to the market mid-week, following Wall Street’s rebound from its downtrend,” RCBC Securities Inc. said.

“Given the sharp drop, bargain hunting of heavily depressed stocks caused the market to rally anew,” Ravelas said.

Another analyst said that for this week, there remains an opportunity for bargain hunting as some stock are still underperforming amid the recovery.

For PSE president and CEO Hans B. Sicat, there is a normalizing as “institutional and retail investors may have over reacted.”

US Federal Reserve board chairman Ben Bernanke earlier said that the $85-billion monthly bond purchase, which has brought much liquidity to financial markets, might be tempered late this year and called off next year if the US economy further improves.

“In terms of corporate and economic growth projections, nothing has really changed,” Sicat said, adding that the Philippine is fundamentally sound despite five weeks of pullback in the stock market.