Market to remain directionless this week

MANILA, Philippines - The local stock market will continue to show a lack of direction with investors reluctant to make any significant moves amid a worsening euro zone crisis and intensifying economic struggles of the US.

Uncertainties on the global front and the absence of catalysts pulled the Philippine Stock Exchange (PSEi) below 5,200 last week but end of quarter window dressing lifted the market to finish at 5,219.55.

 “We still think that the market will be held back by local and foreign factors from successfully moving higher. We are also waiting for earnings results for any possible upgrade in some of the stocks we are covering,” said Maria Arlysa Narciso of AB Capital Securities.

Dismal US corporate outlooks and concerns over slower worldwide growth continue to dampen investor sentiment.

On the homefront, President Aquino’s State of the Nation Address dismayed investors who deemed it lacking in guidance and plans for the next 12 months.

Narciso said investors would stay on the sidelines pending the release of second quarter earnings results of listed corporations. She said the second quarter may be characterized as a challenge for listed companies especially mining firms whose financial performance could be hit by low prices of precious metals.

 “For banks, we expect growth to be sustained although it would not be as impressive as the first quarter… real estate will still enjoy the prevailing low interest rates as buyers are given easier access to credit and lower borrowing cost,” Narciso said.

Aside from earnings reports, investors are awaiting the outcome of the US Fed meeting scheduled on July 31.

Freya Natividad of local stockportal 2tradeasia.com said the central bank’s 25 percent interest rate reduction should provide more lending resources, especially with the line-up of fiscal projects that will be up for bidding.

Natividad sees the market trading between 5,150 and 5,280.