Lenten break, tax payments seen to lock up share prices

With a shortened trading week, the market is not expected to make much of a headway in either direction as investors await clearer signals from both the domestic and global fronts.

Analysts said looking ahead, the volume of trades is bound to decline as Holy Week approaches, which means investors prefer to liquefy ahead of an extended holiday. The market is closed today (Bataan Day) and on Maundy Thursday and Good Friday.

"In the short term, the market is likely to stay within its current levels with no compelling reason to move trading," Wise Securities research head Jose Vistan said in a report posted at the PhilStocks.net website.

He said the market may continue to see bear-market rallies although bargain hunting may likewise continue, albeit cautiously due to the belief that the local economy and corporate earnings will remain weak for the foreseeable future.

"It’s this bear psychology that’s gripping the market and creating a general apathy towards taking positions," he said, adding this kind of thinking is extremely difficult to change since the origins of the current negative sentiment lie mostly in external factors.

Spencer Yap of BPI Securities said the slight uptick in the market last week was boosted by the recovery in the US markets but trading is expected to taper off this week given the shortened trading period and the uncertain issue of stability in the US bourses.

"The market’s recovery (last week) was premised on the deep correction experienced by most of the index issues; bargain hunting accounted for the rise in price of key index issues. However, resistance remains as buyers have been reluctant to push prices higher; in addition, several major index stocks continue to be sold down," Yap said.

Vistan added that payment of income taxes, due on April 16, will also impact on the market’s turnover and liquidity. "It’s seasonally a time where investment decreases in financial markets owing to the need for cash tax payments," he said.

Last Friday, the 30-company Phisix climbed 24.73 points or 1.71-percent week-on-week to 1,471.13 although the gains were mostly on the back of a technical rebound in selected stocks.

He added the weakening exports and falling Asian currencies that dragged the peso down as well to breach the 50:$1 level likewise contributed to the weak sentiment of the market.

Vistan said the upcoming national elections on May 14 may dictate the fate of the present administration’s economic reform programs.

"We have seen most of the damage but there are still no catalysts to get investors excited. The recovery will be gradual as psychology will have to improve before stock prices do," Vistan said.