Stocks seen to enter consolidation phase

MANILA, Philippines - Stocks will continue its consolidation phase this week, with sideways trading expected in the coming days ahead of the release of the first quarter economic growth data.

The decline close to the 6,700 level will prove to be tempting to investors looking to maximize gains in the stock market, analysts said.

“This week, we expect the market to continue to consolidate with a range of 6,750 to 6,900 until first quarter gross domestic product (GDP) results are released, which we expect to be positive,” said Gab Aguila, an analyst at DA Market Securities.

“We expect weaker momentum as investors may take the side lines in anticipation of the upcoming GDP data. The best case scenario that can boost the market is a better-than-expected GDP result, which could push the PSEi back to retest the 6,900 level,” said Joyce Anne Ramos, analyst at AB Capital Securities Inc.

Aguila said the GDP data will be a catalyst for a decisive market move amid the market’s indecisive consolidation.

For Jason Escartin, investment analyst at F. Yap Securities, should the momentum of foreign buying be maintained, the benchmark index “is likely to make a new base at 7,000, as it prepares to head near its 2013 previous high of 7,400.”

Week-on-week, the Philippine Stock Exchange index shed 0.09 percent or 6.38 points to close at 6,811.33, its second straight weekly decline. Profit takers ruled the market after share prices rose due to a possible credit ratings upgrade for the Philippines and the continuation of low interest rates in the US.

“Even as valuation fears, heightened, if not justified by relatively poor earnings in the first quarter, invited a sell-off in equities, liquidity has been ploughed back just as soon,” said Justino B. Calaycay Jr., analyst at Accord Capital Equities Corp.

The lack of alternatives, with real short-term interest rates still at the negative, encouraged investors to park money in stocks, Calaycay said.