ANALYSTS SEE MARKET SLIPPING BACK TO CONSOLIDATION PHASE
MANILA, June 28 , 2004 (STAR) By Zinnia B. Dela Peña - Following a brief rally last week with the President Gloria Macapagal Arroyo, proclamation of the market is expected to slip back to consolidation as investors heed for directions overseas.
AB Capital Securities research head Jovis Vistan said while the market reacted positively to the proclamation of President Arroyo last week, the cheers proved to be meek and short as investors saw no fresh catalyst in President Arroyo’s new term. "The market had already discounted a GMA victory and sees the current situation as going back to where we were before the elections," he said.
Last week, the main composite index closed at 1,579.51, up by 46.76 points or 3.05 percent week on week.
Grace Cerdena of stock portal 2tradeasia.com said investors might take on a more heedful approach in equities early this week, with several players watching for the newly-officiated administration’s economic agenda over the medium-term.
"Some will also heed for indications overseas, specifically on the US Fed’s policy call on 30 June, parallel to the formal turnover of Iraq’s interim government," Cerdena said.
The US Federal Reserve is widely expected to hike rates by a quarter of a percentage point at its next policy-setting meeting on June 29-30.
Vistan said there is still a great deal of concern about a rise in violence after the transfer of power in Iraq from a temporary council to a provisional government occurs. Iraqi guerrillas have stepped up attacks ahead of this week’s handover of sovereignty to a provisional government.
"What the market will be asking is: ‘whats next after June 30?’ With so much anticipation, the market is likely to have a muted reaction to the said month-end events. The market will be in a stagnant mood and it wants some certainty on where the economy is headed," Vistan said.
Vistan said the government will be faced with the same problems that bogged it in the past three years.
Vistan said the next major development to lift stocks may not come until companies start reporting their second-quarter earnings next month.
Cerdena said overall concentration might still be fixated on stocks that are anticipated to deliver well for the remaining semester, alongside other valuation indicators.
BPI Securities said bargain hunting will likely continue with the market trying to anticipate corporate profits for the first half period.
BPI Securities sees the market consolidating between the 1,572 to 1,600 range. "It is likely to build another base within this range if it is to break above 1600 level," BPI Securities said.
Reported by: Sol Jose Vanzi
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