Bargain hunting seen this wk

MANILA, Philippines - The decline in local share prices has opened up an opportunity for episodes of selective bargain hunting and window dressing this week, analysts said.

But gains will be tempered by the imminent tightening of monetary policy in world’s largest economy US that dampen investor sentiment, they said.

“We are looking forward to the round of window dressing in the coming weeks as the market consolidates,” Astro del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

“I am expecting a relief rally given that the main index is oversold right now,” said BPITrade.com director Richard Anthony Liboro.

Abbygayle Estrella, equities analyst at AB Capital Securities Inc., said the bellwether index is expected to hold the 6,000 support level in a week marked by sideways trading.

Week-on-week, the Philippine Stock Exchange index (PSEi) declined 3.12 percent or 193.88 points to 6,014.94, reversing its gains from a week before.

“Philippine shares dove back to the precarious 6,000 level as US Federal Reserve tapering talks topped global markets’ worries on the back of upbeat regional manufacturing data, faster US third quarter economic growth, and anticipated US November jobs report,” Estrella said.

Investors will have to wait for policy signals from monetary authorities.

“The aftermath of the November jobs report will be the precedent on this week’s trade as the critical figure will hint the tone of the next Federal Open Market Committee’s minutes next week,” Estrella said.

“In this regard, we advise investors to say on the sidelines as the market becomes fidgety on the tapering talks,” Estrella added.

On Thursday, the Bangko Sentral ng Pilipinas will hold its final policy setting meeting for 2013.

Justino Calaycay Jr., an analyst at Accord Capital Equities Corp., said the uptick in Wall Street will lend confidence to the local bourse.

“Under normal circumstances and based on the old conventions, the 198.69-point rally in the Dow on Friday and the four-session slump in over-all share prices should usher in a good start for this coming week’s trades,” Calaycay said.

On Friday the Dow Jones Industrial average climbed 1.3 percent while the broader Standard & Poor’s 500 index added 1.1 percent on stronger-than-expected US job creation last month.

While the pickup in US economy will result in the tapering, analysts believe the US economy is strong enough to withstand higher interest rates.

Calaycay said the strong double-digit corporate earnings and better valuations are seen attracting investors back.

Del Castillo said prices are already tempting especially when the PSEi falls below the 6,000 territory anew.