Share prices expected to advance this week

After a lackluster showing last week, Philippine stocks are expected to gain steam in the next five sessions as the economy’s performance during the first quarter of the year will be unveiled.

Analysts still see sideways trading to persist this week but on a more positive bias given inspirations that the country’s gross domestic product (GDP) growth will provide.

“This week will be critical from the vantage point of the broad economy with first quarter GDP expected to be released past midweek. The estimates have so far supported optimism, but the market is obviously being cautious – particularly after the earnings season proved to be decent, in-line but not stellar enough to keep clicking on the buy button. The GDP number can be the turning point for investors’ indecision to push or pull the market either way,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

Depending on how GDP comes out, Calaycay said the benchmark index may test support levels or, at the opposite end, resistance at 7,870 to 7,800.

Jason Escartin, investment analyst at F. Yap Securities, said the country’s first quarter GDP results need to be compelling to stave off April’s net foreign selling of P8.7 billion.

“Long-term prospects are still in place, given the country’s reaffirmed strong fundamentals, plus listed companies’ capex initiatives for the remainder this year,” Escartin said.

Week-on-week, the Philippine Stock Exchange index closed 71 points or 0.9 percent lower at 7,810 behind uncertainties on the US Federal Reserve’s rate hike timing.

“Overseas, and over the longer-term, the inevitable, but still uncertain timing of an, upward adjustment in US interest rates is a double-edged sword, in a manner of speaking. On one hand, it represents the ultimate proof that the US economy is well and back on its feet, able to progress further without the need for crutches. On the other, a shift in the interest rate structure in the US, no matter how gradual it will be, impacts on the portfolio equations — return-risks parameters — and thus a presents a potential flight of capital,” Calaycay said.

For this week, Regina Capital managing director Luis Limlingan said the strategy is to search for issues which are holding above their short-term averages and historical support “to make sure they remain resilient despite expected sideways volatility.”

“By failing to break last week’s 7,950 target, we are seeing a continuation of this trend at least on to two weeks until a clear reversal is triggered,” Limlingan said.