By EDU H. LOPEZ
Share prices are likely to undergo some consolidation after a wave of selling last week as investors are watching on the sidelines.
"If the market fails to recover, we may see a resumption of a corrective phase anew," says BPI Securities.
The market had opened positively, registering early gains. However, sellers crept into the market, says BPI. Among the gainers were Bank of Phil Island and PLDT, while the losers were Ayala Corp., Ayala Land and Manila Water.
Last Friday’s weaker close may confirm the market’s current consolidation phase, having failed to sustain the gains registered from its recent break of the 2300 resistance, says BPI Securities.
AB Capital Securities expects the market to remain in a range-trading mode in the short term.
"Although corporate long-term fundamentals remain solid, the market is quite jittery in the short term."
Since the main index soared above 2,600 last month, traders have been quick to react and take profits on any negative news that come out, AB Capital said.
"The macro economic picture have been mixed with market players worried about higher interest rates and rising inflation. Despite some favorable developments in Iran, crude oil has remained above $ 70 a barrel as we enter into the hurricane season in the US."
Meanwhile, there is growing pressure on domestic interest rates as indications point towards some disappointments in the government’s tax collection efforts.
Continued global concerns on emerging markets and expectations of further tightening in the US contributed to the weakening currency as the peso touched P52.98:$ 1.00 last Thursday.
This is the lowest level seen for the local currency since January of this year, says AB Capital. Since the interest rate contagion, the peso has lost 2.7 percent from its level of P51.526 three weeks ago.
The monetary board has kept its key interest rates unchanged anew as it expects inflationary pressures to continue to ease in the second half of this year.
The central bank’s overnight interest rates have remained unchanged at 7.50 percent for borrowing and 9.75 percent for lending, levels seen since October of last year.
2TradeAsia expects another volatile session to rule commodities trading this week, providing trading windows for speculative mining, oil and commodity-based shares.
"Having leveled-off from prior sessions’ high, these segments are likely to get a sizeable share in fund managers’ available portfolio, as most aim to stretchout returns to offset inflation-related risks."
2TradeAsia advised investors to buy on weakness, sell on modest gains unless uncertainties abate over the volatile crude market and subsequent direction of differentials between domestic and US interest rates.
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