Stocks winding down for the year
The stock market is seen to start winding down for the year with only six trading days remaining.
“We see a downward bias for the local market with a possible testing of the 7,150 support level. The market remains overvalued making it susceptible to profit taking,” said Philstocks Financial Senior Analyst Japhet Tantiangco.
He added that, “Investors may book gains ahead of the upcoming holidays especially if there would be no positive catalyst for the market.”
Offshore worries including a possible no-deal Brexit and the US Congress’ economic stimulus negotiations, if it would not translate into a deal, may also weigh on sentiments.
“Positive catalysts that may tilt the market to the upside next week are progress on fiscal policies planned to support the economy next year, narratives that would point to the availability of a COVID19 vaccine in the Philippines soon, and the resolving of the offshore matters aforementioned,” said Tantiangco.
Online brokerage 2TradeAsia.com said there is also concern over a possible surge in COVID cases during the holidays and if this will force authorities to impose stricter restrictions again.
It added that, “There should be close consideration on turnover buildup in the coming sessions, as the mood turns to last minute shopping, especially from funds intending to do some year-end window dressing.”
“Take the expected volume swings during the last 5 days of the trading year as opportunities to range trade,” 2TradeAsia.com said.
Abacus Securities Corporation is recommending a buy on Pilipinas Shell Petroleum Corporation as “it should benefit from pent up demand going forward. Although the economy won’t fully return to normal next year, our view is that mobility, and thus demand for fuel, will improve significantly. By 2022, fuel volumes should have at least returned to pre- pandemic levels.”
Also, Abacus said that, since its refinery has been shut down, “Shell, therefore, starts 2021 with a clean slate and with a purely distribution-based business model, the huge swings in earnings should be a thing of the past. Furthermore, SHLPH will have less carrying costs and lower working capital requirements.”