Stocks to trade in tight range as funds realign

MANILA, Philippines - Stocks are seen to trade in a tight range this week as investors await major changes in monetary and fiscal measures.

The local market will follow leads abroad that will depend on fund managers’ realignment, analysts said.

“The market might go through consolidation mode for now, until fund managers get to their senses on fundamental growth support that would help justify prevailing market valuations,” said Freya Natividad, analyst at online brokerage firm 2TradeAsia.com.

“It would be too nascent to confirm a possible shift in securities selection for now, unless central banks worldwide confirm a halt in their monetary stimulus plan,” Natividad said.

Astro del Castillo, managing director of First Grade Finance Inc., concurred.

Del Castillo said the dust will settle after fund managers realign their investments amid a possible easing of the US Federal Reserve’s stimulus program.

Week-on-week, the Philippine Stock Exchange index plunged 3.4 percent or 246.96 points to end the month at 7,021.95, with the decline led by holding firms (down five percent) and property (-4.7 percent).

Share prices were weighed down by concerns that US Fed will cut back its monthly bond buyback program given the recovery of the world’s largest economy.

The stellar 7.8-percent first quarter uptick in Philippine economy failed to list investor sentiment, with the main index posting its largest single-day loss in terms of points at 275.22 points on May 30.

Lacking local leads, investors will seek news abroad.

“We will continue to feel the pulse of other markets,” Del Castillo said.

“Players will take their cue abroad for now, until good catalysts emerge to renew interest in local equities trading,” Natividad said.

Natividad said investors should stay alert for possible surge in buying “as soon as supply-side pressure subsides.”

2TradeAsia pegged the immediate support at 7,000, and secondary support at 6,900, while resistance is at 7,070 to 7,130.