Stocks seen moving sideways

MANILA, Philippines - Local stocks are expected to move in a sideways pattern that will see the main benchmark index trade between 5,200 and 5,300 this week.

The Philippine Stock Exchange index (PSEi) slid 148 points or 2.76 percent week on week to close at 5,214 as concerns over the health of global economy continue to linger.

 “Regional economies’ efforts to support additional monetary easing will be a welcome relief, as this would free-up more financing windows within the system,” said Freya Natividad of local stockportal 2tradeasia.com

Accord Capital Equities Inc.’s Jun Calaycay said the upcoming release of second quarter earnings reports should provide sufficient cushion for the index to hold at least the 50-percent line at 5,130.

 “Selective buying of top and second tier counters, leading to the earnings season will play a central role in portfolios moving forward without prejudice to or bias against short-term opportunities presented by news- or rumor-driven rush,” Calaycay said.

Natividad said indicative results point to exceeding expectations set during the initial quarter. “Growth would likely parallel the positive trajectory of the local economy, where ‘growth stocks’ might be highlighted. Attention might give weight on higher yields provided for in holdings, property & financial sectors,” she said.

Mining stocks slumped last week, led by Lepanto Consolidated Mining Co., as investors expressed disappointment over the Mining Executive Order, which was signed last week.

Among the major provisions of the new mining EO is the moratorium on issuing of new permits such as a Financial Technical Assistance Agreement (FTAA).

An FTAA allows a foreign corporation to legally own and control a majority stake of large-scale mineral resources in the Philippines like the Far Southeast project of Lepanto. Lepanto’s procurement of an FTAA is a precondition to Goldfields acquisition of a 20-percent stake in the Yap-owned mining firm.

The new EO also prohibits mining in prime agricultural and fishing areas as well as in 78 designated eco-tourism sites.

The same EO states that no new mining permits would be issued until Congress passes new legislation to raise taxes on mining. The government will charge a five percent royalty on mining companies’ gross earnings, compared with the current tax of just two percent.

The new taxes will bring in an additional $381 million from the higher royalties.