Market seen seeking direction this week

MANILA, Philippines — The stock market will seek to establish a clearer direction this week after moving sideways last week.

“The market is trying to find direction. It is  in a lull, range bound from 7,850 to 8,000  as it fathoms  the odds of a trade war resolution and possibilities by month-end deadline,”said First Metro Investment Corp. vice president Cristina Ulang, referring to the ongoing efforts between Washington and Beijing to finally strike a pact that could finally end the trade war.

Ulang said the trend amidst the evaporation of  foreign buying momentum is all good news.

The market, she noted, had already priced in the still strong fourth quarter economic growth forecast and 4.4 percent inflation last month when the PSEi peaked at 8,100 or 17.4X PE last month, which was up nine percent from year’s start. 

The stock market closed last week on the plus side, as hopes were kept afloat by positive hints on US-China trade discussion.

The PSEi was up 53 points at 7,962 or 0.7 percent week-on-week. 

The All Shares managed to rise at a faster clip at 4,883 or up 1.25 percent, indicating more non-index shares gained. 

According to F. Yap Securities, trading range variance narrowed to 134 points or from 7,830 to 7,9654 from prior week’s 216 points (7,889 to 8,105).

However, foreign investors dumped more shares last week.

There was P178 million in net foreign selling versus prior week’s net selling of P28 million.

Moving forward, F. Yap said the global investing community will likely need firmer guidance on how the US-China trade deal is progressing, even as bets are already in place for an extension of March 1 deadline. 

“Regardless, fund managers may need to assess if both would agree to zero, status quo or higher tariff, specifically on its impact on key production input items,” it said.

The Bangko Sentral ng Pilipinas’ policy meeting on the 26th and implementation of MSCI’s revised basket weighting on the 28th will be among the week’s highlights. 

“Stocks likely to get reduced weight might mirror similar sentiment at home and vice versa. Scheduled earnings releases and guidance will also be known,” it said.

Moving forward, F. Yap said investors should have a balance portfolio with defensive bets. It would also be good to select second-tiers which may also take the limelight, specifically with good earnings as well as improved dividend prospects. 

Immediate support is seen at 7,800 to 7,850, while resistance is at 8,000 to 8,050.