Market to consolidate further as investors still cautious — Analysts
- Zinnia B. Dela Peña () - July 21, 2003 - 12:00am
The market is expected to stay in a consolidation mode this week as investors remain cautious ahead of the release of corporate earnings for the first six months.

In its market outlook report, invesment portal said: "A lot of hopes are clinging on the 2nd quarter corporate earnings results. Investors are likely to be sensitive to earnings disappointments after a solid second-quarter rally."

Analysts said Philippine Long Distance Telephone Co.’s disappointing first half performance might make investors stay on the sidelines while awaiting more significant corporate developments and the release of other corporate earnings results. PLDT announced late last week that its first half net income declined by 34 percent to P1.78 billion after provisions of P4.8 billion to account for staff retrenchment and losses on investments.

In the first half of 2002, PLDT posted earnings after provisions of P2.71 billion. said while stocks continued to move higher, momentum has slowed down dramatically. "A strong reporting season is needed to justify the market’s strong rally," said.

Analysts said some investors may start positioning in blue-chips particularly real estate stocks in light of the low interest rate regime.

As far as the macroeconomic picture is concerned, said: "The economic recovery is coming along, but it’s not robust and not broad in turning around. The 2nd quarter economic growth forecast is lower than that of the first quarter. If the slower economic growth will be accompanied by disappointments on the corporate front, we may see a steeper correction in share prices."

Last week, the composite index closed higher by 14.22 points or 1.12 percent week on week to 1,284.99, on renewed investor‚ confidence buoyed by preliminary figures of a lower-than-programmed budget deficit for the first half this year.

The government’s budget deficit amounted to P79.6 billion for the period January to June this year, well below the P102 billion ceiling for the period. This was attributed to a strong revenue performance and prudent spending.

Providing a major boost to the market was the speech of US Fed Chairman Alan Greenspan, who predicted a stronger US economy ahead and expressed his willingness to keep interest rates low.

The favorable economic reports were somehow dampened by the escape of Jemaah Islamiah terrorist Fathur Roman Al Ghozi, an Indonesian who allegedly confessed to his involvement in the bombings in Manila that killed 22 people. The escape prompted the United States to again issue travel advisories warning its citizens about terrorist threats in the Philippines.

Local share prices have gained by as much as 26 percent off their May 27 lows, boosted by a surprise performance on the government’s fiscal management and hopes of an economic recovery in the second half of the year.

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