Market seen to test 7,000-pt level this week

MANILA, Philippines - Market optimism emanating from the surprise credit rating upgrade and positive economic data are expected to push the main index close to the 7,000 level this week.

The slew of first quarter corporate earnings reports and shareholder meetings are also seen to keep investors interested in stocks.

“Having breached 6,850, technical indications point to the Philippine Stock Exchange index’s (PSEi) potential rise to 7,000, which will be further aided by better-than-expected first results and improved economic prospects,” said Jason Escartin, investment analyst at F. Yap
Securities Inc. Escartin said immediate support is 6,800 while resistance is at 6,900-6,930.

“We might continue to rally this week as a second wave effect of the recent upgrade,” said Freya Natividad, investment analyst at Papa Securities. Natividad pegged the support level at 6,700-6,750 and resistance at 6,900.
 

Week-on-week, the benchmark PSEi climbed 1.55 percent or 104.29 points to end at 6,847, its best since closing at 6,875.60 on June 10, 2013.

It is also the seventh straight week the main index managed to post a weekly gain.
The advancers were led by mining and oil that rallied 3.5 percent as world nickel prices surged while the property sector jumped three percent given the strength of the real estate sector.

Escartin said investors cheered encouraging news here and abroad. For instance, US Federal Reserve chair Janet Yellen said the monetary authority will continue supporting the US economy.

The Philippines received a one-notch credit upgrade to BBB from Standard & Poor’s Ratings Services – the highest the country has received so far from any credit ratings firm.

For this week, investors are awaiting the release of more first quarter corporate income data.

Several blue chips like Universal Robina Corp., GT Capital Holdings Inc. and Robinsons Land Corp. will outline growth plans during their annual stockholders’ meeting.

Natividad said positive economic news will push share prices higher.

Late last week, the Philippine Statistics Agency reported that export revenues rose by 11.2 percent to $5.22 billion in March due to higher shipments of electronic products.

On the monetary policy, the recent increase in banks’ reserve requirement was expected, with investors awaiting light tightening to reign in on inflation in the coming months.

“Stable inflation would lead to higher real investment returns and won’t contradict growth in consumer spending,” Escartin said.

Escartin said investors should balance portfolios by positioning in sectors with solid returns and expansion prospects.