PHL stocks to sustain gains on positive sentiment

AFTER REPEATEDLY logging all-time highs last week, the market is expected to sustain its gains in the days ahead as investors here and abroad are likely to continue banking on favorable overall economic prospects on the back of corporate earnings and the government’s infrastructure and tax reform agenda.

The Philippine Stock Exchange index jumped 1.65% or 137.06 points week on week to close at 8,447.94 on Friday, an all-time high.

For this week, analysts are expecting the bellwether to continue its ascent on the back of positive market sentiment.

“Expectations are high as foreign investors look into the promising growth story of the economy anchored on robust corporate fundamentals, aggressive infra expansion, and consumer spending,” Ramon Emmanuel B. Badiola, equity analyst and trader at Meridian Securities, Inc., said in an e-mail over the weekend.

“Investors are still banking on the good earnings result for the 3^rd and 4^th quarter. The weakening of the [peso] over the dollar may further surge the money supply, as OFWs (overseas Filipino workers) may take advantage of higher forex (foreign exchange) yield,” Mr. Badiola said, while noting that the peso is projected to weaken further due to the possibility of a rate hike this December as highlighted in the minutes of the Federal Open Market Committee meeting last week.

Federal Reserve policy makers had a prolonged debate about the prospects of a pickup in inflation and slowing the path of future interest rate rises if it did not, according to the minutes of the US central bank’s last policy meeting on Sept. 19-20 released on Wednesday.

The readout of the meeting, at which the Fed announced it would begin this month to reduce its large bond portfolio mostly amassed following the financial crisis and unanimously voted to hold rates steady, also showed that officials remained mostly sanguine about the economic impact of recent hurricanes.

“With the holiday season fast approaching, I expect the ramping up of consumer activity that may significantly boost the corporate performance in the last quarter,” the analyst added.

Online brokerage 2TradeAsia.com said if money managers continue to keep optimism in check, the local gauge can move to 8,500 towards 8,800 over the near-term.

“We underscore our view that returns can be made within a market that is growth-affirmative, despite external volatilities,” 2TradeAsia.com said in a statement. 

“The passing of a well-crafted inclusive version of the tax reform bill, the boost on consumer spending, and the rollout of infra projects will be vital key figures in the justification of our expensive market valuation. While on the other hand, geopolitical tensions and various macroeconomic risks will still remain to be the main deterrent to the current market rally,” Mr. Badiola added.

Immediate support level is at 8,400 points, while resistance is pegged at 8,500-8,550 points. — JCL with Reuters