MANILA, Philippines - The momentum from a four-week uptick will likely push share prices higher anew, albeit at a slower pace due to possible profit taking.
News on corporate earnings and the geopolitical concerns in Ukraine will continue to dictate trades this week, analysts said.
“We expect further short-term gains from the market as momentum indicators remain strong,†said Gregg Adrian Ilag, equity analyst at AB Capital Securities Inc.
“Chartwise, the index is still poised to test the 6,500 to 6,700 level in the near-term despite the recent profit taking,†said Jonathan Ravelas, chief market strategist of BDO Unibank Inc.
For Justino Calaycay Jr., an analyst at Accord Capital Equities Corp., there still are positive factors like the breakout from the downtrend that can keep the confidence up despite valuation concerns.
Week-on-week, the Philippine Stock Exchange (PSE) index rose 0.88 percent or 56.84 points to close at 6,481.83, marking its fourth straight weekly gain.
Geopolitical tensions in Ukraine initially weighed down market sentiment. However, the latest string of strong corporate earnings results and strong foreign buying allowed the market to close higher, Ravelas said.
Late in the week, the benchmark index pierced through the 6,500 resistance level or the first time this year. Year-to-date, only the PSE and Ho Chi Minh bourse are in double-digit growth while most Asia Pacific markets are still in the red, Calaycay said.
However, Ilag said that given the market’s ascent, the bellwether index now trading at 17.30x 2014 price-to-earnings ratio versus 13.80x 2014 peer median, “which makes overall market valuations unattractive.â€
“Fresh impetus past earnings are necessary to keep interest in domestic equities burning,†Calaycay said, adding that the low interest rate regime encourages fund managers to retain their exposure on equities.
For this week, Ilag said the global market sentiment will remain focused on the developments of the geopolitical tension between Ukraine and Russia.