Stocks seen moving sideways this week

MANILA, Philippines - Local stocks may see a sideways consolidation pattern with an upward bias as the central bank’s move to cut the rate on its special deposit account (SDA) has boosted the attractiveness of stock market investment.        

“The BSP’s action on SDA rates across-the-board increases the attraction of equities in the context of the return-risk space,” said Accord Capital Equities Inc.’s Jun Calaycay.

“The recent branding of the Philippines as a”rising star” convinces onlookers even more that the future for the domestic economy at large and for equities in particular shows an ability to withstand the risks introduced by and challenges confronting the global economy,” Calaycay added.

Calaycay, however, expressed concern over the market’s overbought condition as it enters into thinly traded territory.

“Nevertheless, perceptions over the forward prospects may overshadow these concerns.  A big correction that should invite heavy and more aggressive buying may have to wait with the core of the earnings season just around the corner,” Calaycay said.

Last week, the main benchmark index rose 0.98 percent, stretching its run of gains to a fourth.

“Friday’s closing trades is a welcome respite from a massive meltdown that raised fears after it took back 44 percent of a prior four-session...The newsfront has come to the rescue of confidence again,” Calaycay said.         

Last Wednesday, Moody’s Analytics, sister firm of the ratings agency, raised the country’s hope for a second investment grade rating after Fitch Ratings last month, following its raised projections for Philippine GDP growth at between 6.5 percent and seven percent this year – the best global economic watchers by far and in line with the government’s official target band of six percent and seven percent.