Bargain-hunting seen

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MARKETPLAY

Bargain-hunting seen

Posted: 0:08 AM | May 22, 2006

 

Inquirer

 

Published on page B1 of the May 22, 2006 issue of the Philippine Daily Inquirer

 

SHARE PRICES ARE EXPECTED to remain vulnerable to the fallout in US stocks, although bargain-hunters may come in after the local index's 6-percent decline last week, analysts and fund managers said.

 

"The market will continue to take its cue from the US market as investors raise cash levels to stay defensive," according to Paul Joseph Garcia, chief investment officer at ING Investment Management.

 

Inflation fears spooked US markets last week, sending the Dow Jones Industrial Average down 2.1 percent last week.

 

Echoing this trend, the PSE index shed 162 points or 6 percent last week.

 

"This was the level before the (heavy) 2-day gain early this month, and is already a 10-percent correction from the recent high of 2,602," AB Capital Securities said in a weekly note to clients.

 

What may offer some relief is news that world oil prices eased at the end of last week.

 

New York's main contract, light sweet crude for delivery in June, dipped 92 cents to close at $68.53 a barrel last Friday. In London, Brent North Sea crude for July delivery shed 99 cents to $68.68 a barrel.

 

"Global anxieties tied to inflation should start to ebb, following Iran's reported consideration to grant access to United Nations (UN) Atomic Agency inspectors. Price adjustments are also expected to be contained in subsequent months, as producers digest the effects of any abrupt price hike on consumer demand," said Grace Cerdenia of 2TradeAsia.com.

 

Asian markets were also pummeled last week on concerns exports to Asia might take a beating with a slowdown in the US economy.

 

"This development doused cold water on last week's news that the Philippine export market was on the verge of a recovery after it posted a 26-percent rise in March (shipments) to $4.1 billion," AB Capital Securities said.

 

According to the National Statistics Office (NSO), the United States remained the Philippines' biggest export client, accounting for 17.1 percent of last month's exports. This was actually higher than last year's when the United States accounted for 16.2 percent of Philippine exports.

 

Meanwhile, 2TradeAsia.com said speculative stocks might take less of the spotlight this week, given the recent correction at the volatile crude market. "This week's immediate support is forecast at 2,320 to 2,330, resistance at 2,380 to 2,420," Cerdenia of 2TradeAsia.Com said.

 

Elizabeth L. Sanchez