Market expected to make last push as 2014 comes to a close

MANILA, Philippines - Philippine stocks will make a last push in the few remaining trading days of the year but will have to fight through international roadblocks to finish the year on a positive note, analysts said.

For this two-day trading week, analysts said investors will either make their last-minute stock buying or selling.

Helping investors decide on whether to sell or buy will be developments in Russia and crude oil prices, said Jason Escartin, investment analysts at F. Yap Securities.

“The ruble’s slide plus sudden spike in benchmark interest rates was reminiscent of Russia’s default and currency devaluation in 1998.  It was also during this period when Russia had to deal with excess crude supply, marked by a period of capital controls to tighten its grip on currency speculators,”

Escartin said.

“The sharp decline in oil prices is positive for oil-dependent economies, the reverse for oil-producing countries.  However, the present fear among players relies on how further the increase in supply would go, relative to demand growth, as OPEC producers reaffirmed their stance to aim for larger share of the market.  Faster increases in supply could bring about wider trade deficits for oil-dependent economies, boosting demand for the greenback to cover import needs,” he added.

Last week, declining oil prices affected the local market, pushing the benchmark index to an intra-week low of 6,882 from a high of 7,275.

The Philippine Stock Exchange index (PSEi), however, managed to rebound behind successive Wall Street rallies fueled by the US Federal Reserve’s positive stance on raising interest rates.

Week-on-week, the PSEi finished 1.4 percent or 99 points lower at 7,125 with all sectors down led by holding firms which lost 2.2 percent.

“Until the dust settles at the crude market, several might still seize on intra-day rallies to cash-out, especially with the long Yuletide break ahead.  Nonetheless, we emphasize the fact that fundamental dynamics for Philippine equities remain solid, and that players would soon realize on its resilience despite global challenges ahead,” Escartin said.

Analysts placed immediate market support at 7,000 to 7,100, while resistance is at 7,200 to 7,300. There will be no trading from Wednesday to Friday.