Lackluster trading seen this week

With a protracted trading week ahead, the stock market is not expected to move significantly as fund managers continue to weigh their options amid a weak local capital market.

As political allies and the administration’s economic managers struggle to rally behind an equally battered presidency and currency, analysts say the market will likely remain driven by technical plays just like the previous week.

"The market remains clouded with uncertainty, waiting for the political and economic fronts to take a spin for the better," All Asia Capital research director Helen Alvarez said in a report.

Week-on-week, the Phisix surprisingly gained 33.65 points or 2.7 percent to finish at 1284.88 last Friday, from its closing level of 1251.23 a week earlier, on the back of early bargain hunting propped up by net foreign buying that has been sustained for 11 consecutive trading days.

Wise Securities research head Jose Vistan noted foreign selling volume has tapered off in the past few days as foreign brokers started to accumulate choice blue chip stocks that are considered oversold such as Ayala Corp., PLDT and SM Prime.

He added Sun Life and Manulife shares are also being lapped up as foreign buyers seek to arbitrage their holdings due to the peso’s sharp depreciation, which makes the Canadian insurers stocks cheaper compared with their other foreign listings. The two insurance giants’ stocks are simultaneously traded in the New York and Toronto exchanges.

However, Vistan said he expects the market to move in a volatile manner as trade turnover remains on the thin side, combining the spate of bottom picking with rounds of profit-taking.

"We’re seeing mixed results in the market right now. But the fate of the peso and President Estrada’s grip on government remain the underlying factors that will determine the market’s movement," he said.

All Asia’s Alvarez said the peso’s staggering decline beyond the P50 to $1 level has the currency falling even faster than the Thai baht which signals its decoupling from its long-regarded twin currency.

In addition, she said the introduction by government of new high-yielding short-term cash bills "can further erode the stock market’s already gaunt volume." As investors shift from equities to these more attractive instruments.

"The general trend is still down for the market although the index could recover to 1300," Alvarez noted.