Stocks look to build on upward momentum

The Philippine stock market will look to build on the momentum it gained last week as it attempts to soar to higher ground this week.

The Philippine Stock Exchange index ( PSEi) rallied for four straight days last week before eventually running out of steam at the end.

The easing of concerns over China and the global oil market fueled the local market’s ascent from Monday to Thursday but investors took the opportunity to take profits by Friday.

Still, the PSEi finished two percent higher weekonweek with average turnover improving 44 percent to P6.5 billion.

“The local equities market is expected to trade range- bound with an upward bias as strongerthan- expected OFW remittances came out past trading hours. We expect this positive surprise to boost the market this week. The PSEi will likely trade between 6,700 and 6,900,” the BPI asset management research team said in a report.

But analysts believe local equities would need more fuel to advance as selling pressures are expected to intensify.

“6,800 is a rather robust long- term resistance which may require more than optimism to breach, suggesting gains may be capped over the short- run,” said 2TradeAsia research head Grace Cerdenia said.

“The market requires additional impetus to sustain the momentum it was starting to build as it makes a bid to breach the 6,850mark,” added Justino Calaycay Jr., marketing and research head at A& A Securities, Inc.

With the end of February fast approaching, Calaycay said attention should begin to shift away from externalities for the moment and focus on corporate earnings.

“Stocks are still at pricey thus putting a lot of import on the coming cycle to find justification for the rich valuations relative to our peers in the region. Profits should rise by about seven percent to 10 percent in order to bring the multiples closer to the bull market norm,” Calaycay said.

“We would also be in the lookout for positive developments in the on- going talks among oil producers in hammering out a scheme to stem the, until recently, unabated drop in the commodity’s prices,” he added.