Main index to move sideways on earnings, polls

By Arra B. Francia, Senior Reporter

THE MAIN INDEX may move sideways in the week ahead as investors digest the results of the midterm elections alongside more corporate earnings results for the first quarter.

The 30-member Philippine Stock Exchange index (PSEi) dropped 0.17% or 13.42 points to close at 7,742.20 on Friday. Meanwhile, on a weekly basis, the PSEi was down by 2.83% or 225 points.

“We may see investors start to come back into the market as the awaited election ends…, hopefully without any surprises,” Eagle Equities, Inc. Research Head Christopher John Mangun said in an e-mail.

The country selected a new set of senators, congressmen, and local government officials on Monday, the results of which will weigh on how the president’s policies and programs will move along in the next three years.

Financial markets were closed yesterday to make way for the midterm elections.

Mr. Mangun noted that first- quarter corporate earnings have also started to come in, showing better results compared to last year as inflation slowed in the January to March period.

Online brokerage 2TradeaAsia.com said companies accounting for 64.78% of the PSEi’s market cap show a simulated year-on-year growth of 12.4%. The simulated growth is at 6.59% for the all-shares counter, consisting of 52.79% of its total market cap.

Investors will also be looking at how the economy will perform in the second quarter following the disappointing 5.6% growth reported in the first three months.

2TradeAsia.com said it sees faster country’s gross domestic product (GDP) growth now that the 2019 budget has been approved and the government can accelerate fiscal spending.

“We expect improved results in the second quarter at 6.3% with the late passage of 2019’s fiscal budget, although possible adjustments might be considered depending on the details of the United States-China trade tariff issue,” the online brokerage said.

The US hiked tariffs on $200 billion worth of Chinese goods to 25% from 10% last Friday, citing sluggish negotiations with Beijing in the previous months. China’s Commerce Ministry said it “deeply regrets” Washington’s actions and plans to take countermeasures against the increase.

“While the picture remains grey on the US-China trade issue, both sides would need to work on a win-win solution to ensure growth momentum is maintained,” 2TradeAsia.com said.

In the meantime, Eagle Equities’ Mr. Mangun is keeping a wait-and-see stance on how the market will react.

“I am still inclined to believe that the market will go higher in the longer term,” Mr. Mangun said.

The analyst placed the market’s support level at 7,500 to 7,640, with resistance from 7,800 to 7,900.