Stock market seen to end mixed with negative bias

MANILA, Philippines - The local stock market will continue to see a mixed performance this week, albeit with a negative bias, with weakness on Wall Street coupled with lingering concerns over the US economy, seen weighing in on investor sentiment.

Last week, the Philippine Stock Exchange Index (PSEi) closed at 4,219.07, down by 100.44 points or 2.33 percent on heavy selling amid prevailing global bearish mood.

“The lack of positive leads, plus higher inflations and missed earnings estimate in major Asian companies, have kept a lid on the optimism over local corporate first quarter numbers. Furthermore, the break under the 4,250 support has caused apprehension over the near-term prospects of the market,” said Jun Calaycay of Accord Capital Equities.

AB Capital Securities’ Prince Anthony Yeung said the main index is likely to test its support of 4,200 as investors are seen to pull back some of their exposure to equities.

 “The selling seen last week can persist in the coming week as investors take profit. Investors will also keep an eye on local and foreign developments. Local developments will be focused on economic data and company specific like first quarter earnings. Foreign developments will mainly come from the US and will center on the health of its economy,” Yeung said.

A massive sell-off in the US commodities market spilled into other bourses, forcing investors out of riskier assets and rattling the Philippine equities market.

Among the major developments in the local front include the Bangko Sentral ng Pilipinas move to raise its policy rates for a second time this year by a quarter percentage point to 4.5 percent.

The move was partly due to rising inflation, which came in at 4.5 percent in April. Prior to the two rate hikes, the Central Bank had kept interest rates at record lows.

 “While the 4.5 percent is still within the Central Bank’s forecast, it is already near the high end. While inflation primarily affects companies that deal with consumer goods, rising interest rates adversely affect property companies, “ Yeung said.

Investors will continue to keep an eye on first quarter earnings results. Slated to release this week are Manila Water, Globe, ABS-CBN, PLDT, Ayala Corp., Ayala Land, Metro Pacific and San Miguel.