MARKET: INVESTORS WAITING FOR NEW POSITIVE DEVELOPMENT
MANILA, July 18 , 2004 (STAR) By Zinnia B. Dela PeÑa - Share prices are expected to trade in a narrow range this week, with investors hoping that upcoming corporate results for the three months to June will provide the market with a convincing lead, dealers said over the weekend.
They said that after a losing week, investors will be anxious to hear some good corporate news to change the negative tone.
"The market is likely to move sideways as investors await fresh positive factors that will give them reason to buy. They want to see the second-quarter results first before making any moves," said Nestor Aguila of DA Market Securities.
"Investors are waiting for new positive developments to help buoy sentiment. The recent government fiscal performance report that it has missed its revenue targets for June may have dampened sentiment," BPI Securities said in a note.
Investors are increasingly concerned that the government will not be able to keep its budget deficit for the year within the target ceiling of P197.8 billion or 4.2 percent of gross domestic product (GDP).
BPI Securities put market support at 1,549 and resistance at 1,572 points.
Last week, the composite index fell 41.23 points or 2.6 percent to finish at 1,551.23 points on Friday.
Average daily turnover rose to 3.16 billion shares worth P631.11 million from 580.45 million shares worth P498.75 million in the previous week.
AB Capital Securities research head Jovis Vistan said investors have expressed concern on how the international community will punish the Philippines for pulling out its humanitarian contingent in Iraq. "There were worries that the US would not forgive the Philippine government for pulling out its troops in Iraq. This could hamper the country’s favored status and could derail external aids and investments to the Philippines," Vistan said.
The Islamic Army in Iraq demanded that the Philippines pull out its 51 member humanitarian contingent in Iraq by July 20 or it would behead a Filipino hostage.
"Trading in stocks at this time of the year can be a little frustrating. Following the declines in local shares, investors may still find it difficult to take aggressive positions. Unless there is a huge catalyst in the next few weeks, markets are likely to keep churning through the third quarter. This is typical of the period or the so-called ghost months. There is nothing in the near term that could provide positive excitement to the market."
Vistan said even when companies start reporting second quarter earnings, fluctuations in the stock market will likely be muted as strong earnings have already been priced in to the market.
"The market needs to see earnings expectations being exceeded for us to see a pick up in interest. Investors maybe growing apprehensive about earnings going forward. Macro-economic indicators are pointing towards a slow down in corporate earnings," he said.
Dipasupil said investors are awaiting President Arroyo’s State of the Nation Address on the opening of Congress on July 26 before taking any aggressive positions.
"This may set the tone for the market towards the rest of the year. Nonetheless, over the short-term, investors will be moving very selectively on lead companies which will be registering continued good earnings – among which would be the telcos, consumer companies and recovering property companies," she said.
According to a property consultancy company, the real estate sector is on the way to recovery as demand for residential and office space has pushed land values in the Makati and Ortigas‚ Central Business District to a substantially higher level during the first quarter 2004. – With AFP
Reported by: Sol Jose Vanzi
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