Market seen touching crucial 6,000-level this wk

MANILA, Philippines - Renewed worries over the US Federal Reserve’s cutback of its liquidity-boosting stimulus program and the economic impact of Super Typhoon Yolanda will weigh down investor sentiments this week.

The benchmark Philippine Stock Exchange index (PSEi) is seen to challenge the crucial 6,000 territory in a tight trading this week, analysts said.

“For this week, I think 6,000 level will be retested. I think investors might start to reposition again, but several of them will still be cautious with the current developments overseas,” said Freya B. Natividad, investment analyst at Papa Securities Corp.

Investors will remain concerned with the possibility of US Fed’s tapering, said Carlos Jalandoni, head of BPI’s Asset Management & Trust Research. Jalandoni expects the main index to trade between 6,000 and 6,200.

“With the index still showing signs of a pullback, we don’t suggest to buy and invest heavily,” said Maria Arlysa Narciso, analyst at AB Capital Securities Inc.

Narciso said a retreat towards 6,000 is not ruled out.

“Having cracked below 6,300 to an intra-week low of 6,079, participants might wait until the market settles to a solid ground before buying bargain shares,” said online brokerage firm 2Trade-Asia.com.

Week-on-week, the PSEi sank 4.12 percent or 261 points to 6,084.84 following a five-day slump. It is the third straight weekly decline for the main index.

Super Typhoon Yolanda raised concerns that the calamity might curtail growth targets in the fourth quarter and next year, Narciso said. Overseas, minutes of US Fed’s meeting showed officials favor the reduction of the $85-billion monthly bond buyback in the coming months as the US economy improves.

“At this level, the PSEi’s pullback and investor selling is entering oversold levels,” Narciso said.

For Natividad, PSEi’s price-to-earnings ratio of 16.3x is still at a premium compared with its five-year average of 15x.

However, an upside can be sourced from the release of upcoming release of third quarter gross domestic product (GDP) data.

“If GDP comes surprising or better than expected, at least this would renew investor confidence,” Natividad said.

Compelling positive news will also spur bargain hunting, Natividad said.