Market consolidation seen this week

MANILA, Philippines — The stock market may consolidate within the 7,700 to 7,900 level this week, analysts said.

“Risk lies at the break below 7,700, which paves the way for a test of the 7,514.05 levels, which could occur in the near-term,” BDO Research said.

The market barometer Philippine Stock Exchange index fell by 0.80 percent week-on-week to close at 7,776.77, driven by the risk-off sentiments arising from the US-Iran tensions.

“However, despite the easing of tensions, investors remained sidelined awaiting fresh leads to entice them back to the markets,” BDO Research said.

Traders said the regulatory risks surrounding water concessionaires Manila Water and Maynilad Water Services Inc. are also sending jitters to investors.

Philstocks Financials Inc. said the regulatory issues confronting the water concessionaires are the biggest threat to the stock market this year.

Philstocks Financials head of research Justino Calaycay said the issue could spread to other utilities and listed companies in the market and could very well turn off risk averse investors away from the stock market.

Despite the risks, Philstocks Financials sees the Philippine Stock Exchange index hitting 8,700 to 8,800 this year on rosy prospects for corporate earnings.

Moving forward, The Market Call said the above six percent economic growth in the third quarter of 2019 should continue into the fourth quarter and beyond and could entice investors back into the market as corporate earnings improve.

We are more optimistic for 2020, since we are seeing a good base-building consolidation, and corporate earnings in 2020 expected to follow the macroeconomic lift,” The Market Call said.

The Market Call is a joint publication of First Metro Investment Corp. and the University of Asia and the Pacific.