MANILA,  March 8, 2004
 (STAR) By Zinnia B. Dela Peña - Even with a lower cost of trading due to the suspension of the documentary stamp tax, stocks are expected to trade sideways as investors await further signs of a pickup in the economy and political stability.

AB Capital research head Jovis Vistan said while strong fourth quarter earnings have raised optimism about the current economic recovery, worries on the domestic politics and US interest rates will persist.

"Investors may got to be on the defensive and be quick to take profits," he said.

Stock investment portal expect players to start the week on a cautious note especially after the peso ended at 56.35 against the greenback Friday.

"However, brave pickers might seize this scenario to purchase selected stocks that have gone off from their recent peak levels, on the belief that volatility at the forex front is bound to be temporary," said.

2tradeasia cautioned that some investors could seize on intra-day rallies to cash-out from the bourse and position in government’s expected issuance of cash management bills (CMBs).

Vistan said the latest economic reports provided little evidence that the economy si strengthening.

Despite the competitive advantage of a weaker peso, merchandise exports for January ended only 4.1 percent higher to $2.84 billion from the year-ago level of $2.73 billion. Most were expecting exports to grow by at least 10 percent this year. Meanwhile, the February inflation rate was at 3.4 percent, flat from the previous months.

BPI Securities, for its part, sees the market consolidating within the 1,430 to 1,500 range.

"The market remains vulnerable; still to too much uncertainty; the events leading up to the elections, the actual elections themselves, and the reaction of various political groups will necessarily impact on investor sentiment and market movement," BPI Securities said.

At the close of trading last week, the main composite index slid by 11.53 points or 0.78 percent week on week to 1,471.65.

The market’s response to the Supreme Court’s decision deeming movie star Fernando Poe Jr. fit to run in the May presidential elections was lukewarm as they continued to cast a wary eye on the economy’s outlook.

The market opened the week with successive days of decline as investors reacted to news that the Supreme Court may remand the FPJ disqualification case to a lower court.

"We still have to see if the market will be able to break out of the 1,435 to 1,500 range and the direction of the break out. If the market can break the 1,500 psychological resistance, then there is a good chance to retest the recent, 1,572 high last January," BPI Securities said."

Reported by: Sol Jose Vanzi

All rights reserved