043007: Stock market strong, seen testing highs

 

 

By EDU LOPEZ Given the generally positive market indicators such as strong value turnover and sustained buying support from foreign fund managers, the equities market is likely to test the year’s high at 3417 points. The market continued to show strength, posting a gain of 40 points on Friday following the gains from Ayala Corp., SM, Petron Corp. and Manila Water, says BPI Securities. AB Capital Securities expects the PSEi to have a strong resistance at the 3,400 level. "It is firmly moving within its uptrend line but close to 20 percent above its 200 day moving average and continues to show negative divergence with its momentum oscillators." The local equities market tried to make a run last week but lost steam. The record close of the Dow pushed the local index to 3,350 but failed to pull it up to the 3,400 psychological resistance, says AB Capital Securities. "Inflationary worries seemed to have eased while global economies showed signs of continued strength. Locally, the main concern is that of domestic interest rates, which seems to be bottoming out." "The disappointing fiscal deficit data and changes in the BSP tiering are seen to put pressure on the money markets. The threat of rising rates will most likely take its toll on the interest rate sensitive sectors like the property and construction sectors," says AB Capital Securities. Philnare also made its debut in the PSE last Friday, posting a strong performance in the first minutes of trade. The issue reached a high of P5.00, up 32 percent from its initial public offering (IPO) price of P3.80 before falling to lower levels. The weakness was brought about by the overall market’s correction of more than 30-points last Friday, says AB Capital Securities. "The PSEi remained on track to achieving a new high as share prices posted a strong week despite a late correction. The index has persistently breached the 3,320-mark, nearing its year high established just before global markets collapsed last February 28," says AB Capital Securities. On a week-on-week basis, the index gained close to 2 percent, going up in tandem with global markets. AB Capital Securities says that the only significant catalyst that brought the index to a 2-month high was the Dow’s convincing rise above the dreaded 13,000-mark. "This event overshadowed the more jolting announcement of a first quarter Philippine budget deficit announced last Monday. The budget deficit of P52 billion was reportedly 14 percent higher than the government’s target, raising concerns on the full year budget."

 

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