MARKET SEEN MOVING SIDEWAYS AS INVESTORS AWAIT GMA'S SONA
MANILA, July 25, 2005 (STAR) By Zinnia B. Dela Peña - The market is expected to trade sideways this week with investors expected to focus on President Arroyo’s State of the Nation Address (SONA) and the second quarter corporate earnings results.
BPI Securities’ Bobby Cano said the market’s direction will be influenced mainly by the speech to be delivered by President Arroyo today as investors await her new economic and political reform agendas that would help build up trust in the government.
The market is closed today following an order issued by President Arroyo declaring July 25 a non-working holiday. According to the order, the move aims to encourage Filipinos and give them the opportunity to listen to the SONA, which she is scheduled to deliver at 4 p.m. today.
Some investors, however, are wary that the President’s address may be met with massive street protests by her opponents, who continue to insist that she quit. The opposition intends to make a political statement by filing their impeachment case against President Arroyo on the same day.
"Another range-trading approach might be adopted by equities investors within 1,850-1,920, until after they see enough clarity on the Philippines’ political and economic direction," online stock portal 2tradeasia.com said in its weekly report.
Last week, the market gained 57.32 points or 3.02 percent to close at 1,954.40. Stocks surged as the local political situation seemed to have calmed down, giving investors enough courage to buy up bargain issues beaten down by the market’s recent sell-off.
AB Capital Securities research head Jovis Vistan said optimism increased among investors on expectations of a higher second quarter economic and profit growth.
The government said the second quarter GDP performance is expected to have expanded by 4.7 percent to 5.1 percent, faster than the 4.6-percent rise in the first three months of the year, aided by improved agricultural output. "The market’s outlook seems to have turned for the better following last week’s trades. Turnover was healthy with purchases centered mostly on the big cap blue chip issues. This is a strong indication that big institutional investors are buying regardless of the political uncertainties," Vista said.
Investors last week cheered the move by President to form a Truth commission that will look into the allegations of election fraud as this is viewed as a credible and acceptable means to resolve the political issue. However, the opposition viewed the move as diversionary tactics.
Cano said investors are now looking forward to more second quarter corporate results and the ruling of the Supreme Court on the constitutionality of the revisions to the expanded value-added-tax law which may be out by the first week of August.
"If this issue is resolved in favor of the government, this would put the government’s fiscal reform program back on track," Cano said.
2tradeasia.com said stocks that are anticipated to report improved first half earnings results will likely be favored.
Traders pegged the immediate support at 1,950 and resistance at 1,980 to 2,000.
2tradeasia.com said the China’s decision to allow the yuan to fluctuate against a basket of currencies will be favorable for the Philippines as it will make exports more competitive. The new yuan strengthened by 2.1 percent to 8.11 per dollar. This was seen as the first step in a series of adjustments to China’s exchange rate.
Reported by: Sol Jose Vanzi
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