Phl stocks expected to move sideways this week

MANILA, Philippines - The local bourse will continue to move sideways this week, albeit at a wider trading range with the release of numerous corporate earnings data.

Strong growth in listed firms’ income will justify high prices, a key factor that might push the bellwether index close to the 7,000 level anew, analysts said.

“As the ghost month has officially started, we expect the market to continue moving sideways, although now at a wider trading band as the second quarter corporate earnings reports are already starting to pour in,” said Joyce Anne Ramos, analyst at AB Capital Securities Inc.

Ramos pegged the immediate support at 6,815 and immediate resistance at 6,900.

“It will be another sideways trend for this week as investors will continue looking for a comfortable trading range pending leads to boost market up,” said Freya Natividad, investment analyst at Papa Securities.

Investors are awaiting earnings results of companies, Natividad said, adding that trading range would likely be at 6,800-6,950 barring any surprises from advanced economies.

For Jason Escartin, investment analyst at 2tradeasia.com, trading might be relatively subdued in the August ghost month when Chinese investors refrain from making major investment decisions and foreign fund managers take a vacation.

Escartin said that as the Philippines’ macro prospects remain intact, seasoned contrarians are likely to seize on market lulls to ride on corporate earnings prospects toward 2015. Immediate support is 6,800-6,830 and resistance at 6,950-6,970.

Week-on-week, the Philippine Stock Exchange index inched up 0.07 percent or 4.68 points to 6,894.23, marking its second weekly gain due to episodes of bargain hunting despite the slight increase in interest rates and a hefty decline in Wall Street.

Average daily turnover slightly improved to P6.85 billion from P6.76 billion a week ago while net foreign selling eased to P45.79 million from P431.04 million.

“The release of the second quarter corporate earnings will guide the market participants on whether to push the market back to and past the 7,000 level or not,” Ramos said.

The main index hit 7,000 early in July, but failed to move higher or stay in the same level due to valuation concerns.

“Earnings will be the key to sustaining closes above the [6,900] line. On the other hand, unless drastic and unanticipated developments crop up, the measure appears solidly holding the 6,830-6,850 support range,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

Ramos said investors should continue hunting for bargain stocks, taking cautious positions and trading at a range.