Investors expected to take wait and see stance

MANILA, Philippines - Investors are expected to take a wait and see stance  until the US budget issue is settled, analysts said.

External leads will continue to dictate the movements in the local stock market, which is still attractive given growth prospects for this year and the next, they also said.

“I think there will be potential sideways to a weaker trading because of the concerns over the debt ceiling in the US,” said Michaelangelo Oyson, managing director of BPI Securities Corp.

“In the week ahead, the market will likely follow Wall Street’s lead as the ongoing debate in the US with regard to its budget and debt ceiling will remain a concern for investors,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

Astro del Castillo, managing director of First Grade Finance Inc., said the next few days will likely be a repeat of the past week, with investors remaining cautious until the debt ceiling issue is settled.

Week-on-week, the Philippine Stock Exchange index (PSEi) slipped 0.69 percent or 44.64 points to 6,379.81, snapping a back-to-back weekly gain for the main index.

The bellwether index posted marginal losses in the last four trading days, dragged by weaknesses in markets abroad and worries over the US debt ceiling.

Amid external jitters, Calaycay said local investors seem to have set aside the positive news on the improving domestic economy and the earnings momentum of listed firms.

“That sort of noise would spook some investors but again that presents a window of opportunity for people who missed the stock market,” Oyson said.

“Over the near term, the PSEi appears to be going into a consolidation mode, building support between the 6,300 and 6,400 marks,” Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.

Abacus Securities Corp. projects a sideways movements this week until the main index makes a decisive move and breaks the 6,587 ceiling or the 6,370 support level.

“As long as the strong support of 6,350 holds, near-term bias is to try the 6,500 levels. If the 6,350 level fails to contain the market, expect a retest of the 6,000 levels or even lower,” Ravelas said.

Despite the market correction, investors who are brave enough are poised to book profits.

Calaycay pegged his yearend projections at 7,000, with the near-term hurdle at 6,800.

“My fearless forecast is 7,000 by yearend,” Oyson said, adding that the PSEi posted an average gain of four percent for the fourth quarter alone.