Market seen to remain in lethargic mode this week

With no positive catalyst in the near term, the stock market is expected to remain in a lethargic mode as the mixed corporate earnings results have dampened investors’ optimism.

"The local equities market is expected to remain in a corrective mode next week. Share prices should go on neutral with some minor losses brought about by profit taking," said AB Capital Securities’ research head Jovis Vistan.

"There were some disappointments in the second quarter corporate earnings, which came out mixed to lower-than-expected. Traders, who positioned on optimism of strong earnings, were quick to salvage whatever profits they could still squeeze from the market. Since the market topped out in May, the steep drop in share prices has been quite a harrowing experience for some investors," Vistan added.

Last week, the Philippine Stock Exchange (PSE) index fell 0.89 percent, or 21.14 points, to 2,341.46 as losses of PLDT’s ADRs in New York fuelled another selldown. Average daily turnover fell to 3.01-billion shares worth P1.06 billion compared to 3.812-billion shares worth P1.497 billion in the previous week.

Vistan said the market’s subsequent recovery has constantly been challenged by various issues and concerns. "No matter how positive the economic and corporate fundamentals may look, there always seems to be something to worry about. The concerns are mostly external like geopolitics, rising oil prices, terrorism and uncertainties on US interest rates," he said.

Support is seen at 2,250 while resistance is at 2,400, analysts said.

AB Capital Securities’ Erwin Balita said crude oil prices will remain a concern for investors. Prices of crude oil increased by as much as $77.44 per barrel.

"Resilient oil prices have fanned inflationary worries in the US, complementing pressure that higher energy prices will eventually cut down corporate profits on a global scale," Balita said.

Analysts said investors’ attention will remain focused on third-liners particularly mining issues given the recovery of international gold prices and improving corporate prospects. Gold prices managed to climb back above $660 per ounce this week on strong buying interest given renewed inflationary threats and a weaker dollar.

Philex Mining Corp. reported that its net income for the first semester of the year amounted to P1.2 billion, an almost 10-fold increase from earnings in the same period last year. The significant jump was due to higher realized metal prices at $3.11 per pound copper and $577 per ounce gold this year versus $1.57 per pound copper and $405 per ounce gold in 2005.

With gold price hovering close to $660 per ounce, Philex’s prospects remain positive in the second half. With copper price hovering near record highs as well, Philex is confident that it will record a banner year, with consensus earnings estimates hovering between P2 to P2.5 billion in 2006.

Apex Mining Co., Inc. recently reported an update on its mining activities in its Masara Mine in the Compostela Valley Province. Based on the report provided by the Snowden Mining Industry Consultants, a total mineral resource of 1.4 million ounces has been estimated in the area, giving approximately seven to nine years production.

Global Equities Inc., for its part, has caught market punters’ attention for the past two weeks. Its board last week approved the assignment and conveyance of substantially all its assets amounting to P863.8 million in favor of outgoing chairperson Nora Bitong as payment for advances extended the latter to GEI. She will also assume all the liabilities of GEI and its subsidiaries amounting to P1.138 billion.

Businessman-stockbroker Jerry Angping was appointed as new chair of GEI which is in the process of identifying businesses that will enhance the company’s value.