Stocks to carry on upward momentum

MANILA, Philippines - Heightened trading activity is seen to push share prices higher this week as institutional investors return from the long Chinese New Year holiday.

The Philippine Stock Exchange index (PSEi), fresh from breaching the 6,500 territory, is banking on corporate earnings reports to record more growth, analysts said.

“Rises this week will take its support from recovery in average momentum, plus sustained net foreign buying turnover,” said Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

Institutional investors will return to the market following the Chinese Lunar Year break.

Natividad said investors will be welcomed with continuing accommodative monetary policies, higher fiscal spending and improving liquidity momentum.

The earnings season is also around the corner as listed companies report full-year corporate performance.

“Earnings will be the main focus when trades resume (today),” said Justino B. Calaycay Jr., analyst at Accord Capital Equities Inc.

“Earnings should rise between 25-30 percent off 2011’s level to justify the market’s unimpeded rush to the full year index target,” he said.

For Natividad, a validation of current share prices given robust corporate income will prompt optimists to continue flocking to equities for investment opportunities.

Week-on-week, the PSEi gained 0.97 percent or 62.97 points to 6,521.64, supported by property (+3.06 percent) and financials (+2.63 percent). The broader All-Shares index rose 0.91 percent or 37.03 points to 4,101.44.

The main index posted its 16th record high for the year at 6,527.99 on Wednesday on good macroeconomic prospects.

Investors took a break during the holidays, resulting in average turnover easing to P7.035 billion from P8.8 billion a week.

“Locals might search for modest range to trade, as they gather reasons that could propel the PSEi towards higher planes,” Natividad said.

Immediate support for the week is 6,480-6,500 while resistance is pegged at 6,600-6,650, Natividad said.

“At this point however, there is so much positive perception that even the tiniest drop in share prices are seen as large openings for profit opportunities,” Calaycay said.