Market seen flat this week

The stock market is expected to move sideways this week with the 2005 earnings reporting season almost complete and lack of corporate news to trade on.

AB Capital Securities research head Jovis Vistan said investors would rather wait and see how listed companies will perform in the first quarter before taking heavy positions in the market. "Earnings are likely to be pressured by higher inflation and higher corporate taxes. It will be very difficult to duplicate the earnings growth performance from the past years amidst a more difficult business environment," Vistan said.

Vistan said while the political situation seemed to have a bit stabilized, there have been concerns raised about a possible hike in the benchmark US interest rates.

"Notwithstanding, we believe that the rest of the first half will be defined by sideways, choppy trading and that a great bull market won’t erupt until the second half," Vistan said.

BPI Securities, however, sees the market consolidating between 2,100 and 2,172.

News that the Senate passed on third and final reading the extension of the Special Purpose Vehicle Act helped boost market sentiment with banking stocks leading the uptick.

Week-on-week, the financial index was 1.3 percent higher, led by Metrobank which is seen to be a main beneficiary of the SPV law.

Metrobank, which plans to unload between P8 billion and P10 billion worth of non-performing assets this year, gained nine percent to close at P37.

Online stockportal 2tradeasia.com said investors’ focus might still be on large caps, as some investors take advantage of the recent decline to position in their favorite issues.

2tradeasia.com said market players will consider the following prior to investing: the extent by which companies could support descent corporate earnings growth despite challenges at home and overseas; funds flow between developed and emerging markets with the US’ burgeoning fiscal and trade imbalances; and an appropriate mixture of monetary and fiscal policies that could help draw permanent capital investment.