Shares to trade sideways ahead of Q4 GDP data

TRADING at the stock market is seen to stay quiet until the government’s scheduled release of its gross domestic product (GDP) report this week.

The benchmark Philippine Stock Exchange index (PSEi) climbed 69.40 points or 0.90% to close at 7,722.58 on Friday. However, the main index fell 54 points or 7% on a weekly basis due to the muted four-day trading.

“Taal Volcano’s unexpected eruption that spewed ashes as far as the metropolis kept investors on tentative note for most of the week, shrugging off the signing of phase one US-China trade accord,” online brokerage 2TradeAsia.com said in a market note.

While average value turnover last week improved 25% to P7 billion, net foreign selling also expanded to P1.4 billion from P1.2 billion in the week prior.

“[T]he main index could not seem to catch a break ending lower, marking its second consecutive week of losses. However, it was able to close the week above the 7,700 key support level after breaking below it several time throughout the week,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun noted.

Heading into the new week, Mr. Mangun said investors are likely to stay silent amid the fading of their “new year’s optimism” and the continuous threat of a bigger natural calamity in Taal.

“The new year’s optimism that most investors had is slowly vanishing as the market continues to move sideways. Coupled with the threat of a major disaster, as the Taal volcano rumbles, investors have turned cautious again as no one wants to be holding the bag if things get worse,” he said.

But Mr. Mangun said investor interest may improve because of the release of the fourth-quarter GDP report by the Philippine Statistics Authority.

“This will prove if the government’s fiscal policy in the last twelve months has effectively spurred economic growth,” he said.

The Philippine Statistics Authority will report official fourth quarter and 2019 GDP data on Jan. 23.

AAA Southeast Equities is expecting GDP growth in the fourth quarter of 2019 to have come in at 6.5% at least.

For 2TradeAsia.com, this week’s trading will still largely take cues from the Taal volcano events. “In an extreme explosion scenario, it is…worth to note fiscal pump-priming follows next,” it said.

It also said the market may still enjoy some positive investor sentiment from the signing of the US-China phase one deal last week, which it noted should be seen as a “work-in-progress.”

“The list of attractive companies have already expanded, and it only takes a matter of time before these take notice. Position gradually on dips and hold. Immediate support is 7,600 resistance, 7,850-7,950,” 2TradeAsia. com said.