Shares likely to rise on seasonal spending surge

SHARES are seen to rise in the week ahead as the seasonal consumer spending uptick kicks in, alongside expectations of slower inflation for November.

The benchmark Philippine Stock Exchange index (PSEi) dipped 0.19% or 14.58 points to 7,367.85 last Thursday. Despite the weakness on the last trading day of November, the main index was up 0.38% or 27.67 points on a weekly basis, and up 3.2% compared to the previous month.

The mining and oil and holding firm counters were top gainers last week, advancing 1.37% and 1.14%, respectively. Turnover climbed to P41.78 billion, which analysts attributed to month-end window dressing and MSCI rebalancing.

“With the current trajectory of the market it is possible that we will be seeing a ‘Christmas rally” this year. The continuing drop in oil prices will tame inflation coupled with the strengthening of the currency will entice investors to get back into the market,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

The Christmas rally, also known as the Santa Claus rally, pertains to the sustained increase of stock markets in the month of December. This usually happens on the last trading week of the month.

Analysts are also counting on the release of November inflation data on Wednesday.

“Crude’s decline...plus the arrival of staple food supplies (i.e., rice) would support tamer inflation for November. If this trend is sustained, that would aid December’s seasonal consumer spending uptick, apart from influx of remittances,” online brokerage 2TradeAsia.com said in a weekly market note.

The Bangko Sentral ng Pilipinas’ Department of Economic Research pegged inflation to be within the 5.8-6.6% range for November. This is in line with government expectations that inflation has eased from the 6.7% peak in both September and October.

Mr. Mangun noted that the only concern would be the continuous outflow of foreign funds from the local market. Net foreign selling stood at P733 million last week.

“However, with western markets starting to correct, we may see them flock back to emerging markets like the Philippines... We may see the index test support in the shorter term but we still see index breaking above 7,500 before the end of year for a strong finish,” Mr. Mangun said.

Overseas, investors will be looking at how the United States and China iron out their trade relations at the G20 Summit in Argentina this weekend.

“We see global leaders coming to terms to avoid any regrettable outcome that would lead to repetition of history’s mistakes,” 2TradeAsia.com said.

Eagle Equities’ Mr. Mangun placed the PSEi’s support from 7,000 to 7,270, with resistance from 7,500 to 7,800.