Stocks seen taking a breather

MANILA, Philippines - Local stocks are expected to take a breather in the three-day trading week after rallying to a record high despite slumping markets overseas.

Analysts said the market is bound to consolidate this week given the long holiday to coincide with Pope Francis visit from Jan. 15 to 19.

However, they are also not discarding the possibility of ano-ther all time high especially as local modds may be uplifted days leading to the Papal visit.

“While the short-term charts now show a bullish picture driven by the 10-day rally, the long-term, monthly charts still suggest some weakness. Both time horizons in fact suggest that the PSEi is deep into overbought territory,” Accord Capital Equities Corp. analyst Justino Calaycay Jr. said.

The Philippine stock market impressed many analysts and observers last week as it defied the weakness shown in US and Asian markets in the first few days of the trading week. 

“Despite Wall Street’s gyration however, we laud the local market’s overall response, as several fund managers seized on any hint of weakness to buy,” F. Yap investment analyst Jason Escartin said.

“Gauges were off to a good start for 2015, despite volatile trades in US equities during the holidays.  Buyers prevailed, especially after the Fed minutes showed officials are unlikely to raise US interest rates before late April.  Talks were also up that $1.1 billion infrastructure projects in China might be accelerated this year, to boost growth,” Escartin said.

The local benchmark index pulled off a strong finish last week by setting a new high at 7,402.72.

Week-on-week, the PSEi gained 2.4 percent or 172 points as turnover improved 37 percent to P9.4 billion on average.

“While we welcome this kind of start by the market for the 2015 trading calendar, we are not prepared to water down our call for caution given the developing long-term picture. Investors are well advised to take advantage of the present positive volatility, if and when it extends to next week,” Calaycay said.

“But the call to never compromise risk-management is equally important. A 10-day rally is bound to snap and one would not want to be caught holding the bag — again, not when the long term picture isn’t as rosy as it was in previous years,” he added.