Portfolio repositioning seen driving index this week

MANILA, Philippines - The return of investors from extended holidays and the concurrent seasonal portfolio repositioning will drive the main index to test the 6,000-point level anew.

Economic data here and abroad will keep investors busy but short-term weakness will likely persist, analysts said.

“Action is expected to pick up as schedules and routines return to normal,” Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.

Calaycay pegged the trading band at 5,770 to 6,075 in the near term, with turnover to pick up when the benchmark index breaks past the 6,265-mark.

Piercing through the strong resistance level of 6,000 will allow the main index to climb to as high as 6,300, said Jonathan Ravelas, chief market strategist of BDO Unibank Inc.

“We expect further gains for the market next week as investors continue to reposition for the year,” said Gregg Adrian R. Ilag, analyst at AB Capital Securities Inc.

The Philippine Stock Exchange index posted modest gains in the first two trading days of the year due to the seasonal January effect. It rose 0.99 percent or 58.10 points to close at 5,947.93 week-on-week amid weak turnover that averaged just P3.9 billion.

The January effect refers to the bargain hunting shortly after selling stocks in December for tax purposes, Ilag said.

Calaycay said over the last 10 years, the January effect proved true only in 2005, 2007 and 2012.

For the first full trading week this year, investors will be busy checking US economy and local inflation data.

“Investor sentiment will likely be driven by the release of the Federal Open Market Committee meeting minutes for the month of December, the press conference of the European Central Bank and the reporting of the non-farm employment change in the US,” Ilag said.

On Friday, Wall Street ended mixed given investor concerns on how quickly the central bank will cut its stimulus program.

The Dow Jones industrial average inched up 0.17 percent or 28.64 points to 16,469.99, while the broader Standard & Poor’s 500 index fell 0.03 percent or 0.62 points to 1,831.36.

On the local front, economic data to be released include the November budget balance, November exports and December consumer price index.

Calaycay said there are medium- to long-term opportunities “arising out of a still probable daily, short-run weakness” as the 

“We think the current prices are offering attractive upsides to valuation which is why we prefer buying shares at current levels,” Ilag said. AB Capital pegged the support level at 5,890 and resistance at 6,060.

Ravelas said failure to break above the 6,000 level could call for further losses towards the 5,800-5,850 territory while Calaycay said the major support is at 5,662.13.