Shares expected to climb as focus turns to SONA

LOCAL SHARES may move up this week as investors anticipate the president’s state of the nation address (SONA) on Monday.

The benchmark Philippine Stock Exchange index (PSEi) went up 0.15% or 11.74 points to close at 7,399.61 on Friday, staying flat from a week ago with a 0.01% increase.

The property sector’s 1.2% gain and industrials’ 0.82% uptick failed to offset the decrease in holding firms, which gave up 1.83% for the week. Turnover remained thin, dropping by 37% to P3.4 billion on average.

“Gauges turned relatively unchanged during the week, with sessions limited within 7,3347,459. Activity was light with MOC ( market on close)- boost mostly prevalent, ahead of Pres. Duterte’s SONA [this] week,” online brokerage firm 2TradeAsia. com said in a weekly market note.

Analysts are banking on what President Rodrigo R. Duterte will be saying during his third SONA on Monday, where he is expected to deliver a report on his administration’s accomplishments and plans moving forward.

“The president will be giving his state of the nation address on Monday which may give investors the assurance that they have been longing for. This event may turn out to be the catalyst to get investors back into this market,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a market report.

2TradeAsia. com said stock investors will likely focus on the next phase of the tax reform program, especially to changes on corporate taxes, the retention or removal of fiscal incentives and provisions on renewable energy.

Extra attention will also be given to updates on the government’s flagship infrastructure program called “Build, Build, Build” as well as the Duterte administration’s stance on the country’s territorial dispute with China.

“Specifically, investors would like to see if the key direction hasn’t changed or may divert in light of the initial phase of the tax reform plan’s impact on inflation. This will be crucial to listed companies’ capex rollout, including timing of budget preparation for large- ticket infra undertakings. As such, any hint to affirm this year’s growth prospects could invigorate appetite for equities, especially if these would lead to increased direct investments & job creation,” the online brokerage said.

Should the president’s report fail to uplift market sentiment, Eagle Equities’ Mr. Mangun said the main index may continue moving sideways and retain its low trading volume instead.

At the same time, 2TradeAsia. com said investors are also looking forward to the release of second-quarter corporate earnings. It noted that with the recent outflow of foreign funds from the local market, foreigners may be positioning themselves and are “merely waiting for opportunities to move in.”

Eagle Equities’ Mr. Mangun said support is from 7,340 to 7,185, while the resistance to overcome is 7,450 to 7,500.