Stocks seen to deliver upside surprises this week

MANILA, Philippines - Local stocks are likely to continue to deliver upside surprises particularly from mining issues that have recently drummed up enough interest from investors.

“It seems like we will be seeing the PSEi move higher again next week with a little push from the mining issues. However the period by which these mining developments could have an influence over the index may not last long,” said AB Capital Securities over the weekend.

Last week, the main composite index gained 3.33 percent or 138 points to close at 4,291.44, helped by increasing activity in a number of mining issues such as Philex, Manila Mining and Atlas Consolidated Mining & Development.

While most of the sub-indexes faltered slightly, the mining counter zoomed ahead with Philex posting the highest gain at 22.4 percent to finish at P23.30 Friday on rumors it would buy into Atlas.

The strong interest in Philex was also attributed to news that its Silangan project covering its Boyongan and Bayugo ore deposits, contain gold and copper reserves worth $22 billion. 

“With all the uncertainties in the equities market, investor interest may shift to gold and other precious metals. This will play to the advantage of Philex,” AB Capital Securities said.

The ongoing debt crisis in Greece will continue to be a concern for investors around the world as the region’s leaders seek steps to avoid a first sovereign debt default in the EU.

“Index heavyweights TEL and ALI may continue to serve as a cushion for the market to keep it from slipping. Right now, both stocks are set to move higher. Technical indicators are positive for both TEL and ALI,” AB Capital Securities said.

AB Capital Securities said investors will also deal with banking issues due to investors’ slight aversion on the industry. Looming on the sector is a peak in inflation in the second half of the year and monetary officials’ response to the country’s liquidity and growth concerns.

“Most banks are trading below their moving averages and are struggling to break through their resistance levels. Noticeably, technical indicators show that the this trend may extend for a longer time,” AB Capital Securities said.

Among the three biggest banks, BPI is seen to trade higher this week after breaking its downward channel line at a resistance level of P56.85.