Market may take wait and see stance

Market investors are expected to take a wait and see stance this week after the stock market recently reached new highs.

But moving forward, F. Yap Securities sees immediate support for the benchmark Philippine Stock Exchange index at 8,070 to 8,100 and resistance at 8,300 to 8,350.

Week-on-week, the benchmark Philippine Stock Exchange index dropped 1.04 percent to 8,183.

In a commentary, F. Yap Securities said: “Volatility simmered 41 percent to 157 points or from 8,115 to 8,272 compared to the prior week’s 266 points or from 8,153 to 8,419. Turnover stood at P6.67 billion on average, while foreigners turned net sellers at P3.6 million on average. Market breadth favored pessimists, 109 to 82.”

F. Yap said first half earnings to be announced this week would also provide market direction.

“This week, first half earnings are slated to be announced by select firms including Banco De Oro, Meralco, Aboitiz Equity Ventures, Metro Pacific Investments Corp. and Ayala Corp. These firms comprise 23.2 percent of the PSEi basket and any indicative tend of stronger quarter on quarter results would support the case for improved valuations on target prices,” it said.

Thus, market investors are expected to keep a close watch on the downpour of first half corporate earnings results that will come in this week and which are expected to provide a gauge on second half performance as well.

On the other hand, market investors might also stay on the sidelines after this week because of the traditionally quiet ghost month.

“Having moved slightly below the 8,200, market watchers will test the PSEi’s strength above this mark, especially with July’s month-end closing. For now, some might be prompted to go on hiatus mode with the onset of the lunar calendar’s ghost festival. This window presents ripe opportunities to position gradually, timed with an expected pick up in economic activity in the fourth quarter,” F. Yap said.

The market would also heed clearer fiscal agenda in the second half including the passage of legislative bills on sequel phases of tax reform, specifically on reduced corporate income taxes and final plan on rationalization of fiscal incentives.