Bellwether stocks on the rise
If the positive momentum in the local stock market will carry on in the next few days, some of the bellwether stocks, including major utilities and conglomerates, will likely rise as well.
Jason Escartin, investment analyst at F. Yap Securities, said “there will be more good things to come” in the local stock market this week as volatility somehow declined.
“Since 24 August, the PSEi [Philippine Stock Exchange index] has gone above 7,200, breaching target resistance for the 3rd testing last 23 October. The PSEi hit its upper 30-day Bollinger Band which has narrowed considerably, indicating reduced volatility. Set against a strong macro environment, upsides are to be seen especially for fourth quarter corporate earnings,” Escartin said.
“Meanwhile, it might be timely to revisit Meralco, after rising 3.3 percent week-on-week. Optimism in the distribution utility's prospects could spread to other bellwether stocks, especially those that hold considerable interests in MPI [Metro Pacific Investments Corp.], TEL [Philippine Long Distance Telephone Co.] and JGS [JG Summit Holdings, Inc.],” he added.
BPI Asset Management also expressed the same confidence with TEL, highlighting the company as one of the “top movers” of the PSEi last week.
For this week, market participants will also take cue on external developments like the Federal Open Market Committee (FOMC) meeting.
“Following the European Central Bank’s [ECB] continued support for stimulus by extending its bond purchase plan, sentiment will take its cue from the US Fed [FOMC] and Bank of Japan’s [BoJ] meeting this week,” Escartin said.
“Given the interest rate hike postponement from the Fed, the consensus for a status quo is supported, given persistent weakness in the global economy – a scenario that would be favorable for equities. This would give enough breathing room for investors to realize gains, at least until the next policy decision & final meeting this December,” he further said.
Philippine shares sustained its positive momentum towards the end of the week, seeing Philippine shares surge by 118.60 points, or 1.67 percent to close at 7,236.38 on Friday. “The local equities market went up after the ECB signaled to provide further stimulus measures within its economy,” BPI Asset said.