PSEi seen breaking 6,900-level on Q1 earnings

MANILA, Philippines - Optimism over economic recovery in advanced economies and first quarter corporate earnings will push the main index past the 6,900 level this week.

But tensions on the Korean peninsula and concerns over high valuations will keep share prices in check, analysts said.

“Unless fresh negative news emerges over the weekend, optimism is seen to be carried through week 16 of trades,” said Justino B. Calaycay Jr., analyst at Accord Capital Equities Inc.

“The local barometer would attempt to move past its 6,950 previous peak, after breaching 6,830 during the week,” Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

Natividad said the ascent will still be liquidity-driven, with higher momentum pushing the main index to unchartered territories.

Week-on-week, the Philippine Stock Exchange index (PSEi) rallied 2.44 percent or 164.29 points, closing at its 25th record high for this year at 6,891.43.

RCBC Securities Inc. said the rally was driven by the sustained strong performance of Wall Street, growth forecast upgrade of Asian Development Bank and high liquidity.

The gain, which came amid tensions in North and South Korea, was led by mining and oil companies (up 4.53 percent) and holdings firms (up 2.96 percent).

For this week, Calaycay said “expectations over the first quarter 2013 corporate numbers will keep interest in top-tier and second-line counters heightened.”

Natividad said solidified monetary stimulus measures from regional central banks, and growth and recovery prospects will benefit the stock market.

But several downside risks will keep prices in check.

“Anticipate gyrations however, especially if geopolitical tensions between the US and North Korea escalate,” Natividad said.

If gauges weaken, stabilization above 6,800 is seen, she said, adding that immediate support is 6,800 and resistance is at 6,950-6,970.

Calaycay said there is concern on a technical standpoint that shows high valuations.

“The conventional view posits a slight easing off the top, which should open the doors for the next round of buying to push the measure sustainably above the 7,000-mark en route to hitting the upper end of our full year forecast range of 7,200,” Calaycay said.