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Market seen trading weak on Korean woes

The stock market is likely to sustain a downtrend this week, as investors monitor the escalating tension on the Korean peninsula and other negative developments overseas to justify the technical correction of the benchmark index. PCCI Securities analyst James Lago said despite the technical correction last week, local stocks remained expensive compared with those of other Southeast Asian markets. “The market is still very expensive so investors are using the increasing tension in North Korea and the problem in Cyprus as reasons for the market’s correction,” Lago said. An analyst from a foreign brokerage house also said the lack of catalysts contributed to current lackluster trading while the upcoming election was diverting the government’s attention from implementing economic reforms. “The market is still pricey versus other regional markets and investors are waiting for the correction before reinvesting in the market,” the analyst said. The Philippine Stock Exchange index, the 30-company benchmark, ran out of steam last week in reaching the 7,000-point level, as the Cyprus bailout and North Korea’s nuclear threats eclipsed the euphoria brought about by the country’s first investment grade status. The benchmark index, which reached a new intra-day high of 6,956.92 on April 1, fell 120.33 points, or 1.8 percent, to settle at 6,727.14 on April 5. The broader all-share index shed 38.35 points, or 0.9 percent, to close at 4,195.96 over last week’s five-day trading period. Value turnover was lower as investors stayed on the sidelines due to the rising geo-political tensions that threatened the global markets. AB Capital Securities analyst Abbygayle Estrella said the PSEi’s failed attempt to break through 7,000 points signified the strong, psychological resistance of the benchmark. “Being the first to raise its credit outlook to the country, the effect of Fitch’s investment rating upgrade was short-lived because the market has been factoring it since last year. This, countered by the jitters from North Korea, had reverted the main index back to 6,700 from its sudden rise to 6,900,” Estrella said. She said while the market continued on a downtrend, investors might do well to preserve their profits as market could still pull some surprise. Trading will also be shortened this week as April 9, Tuesday, was declared a non-working holiday in observance of Araw ng Kagitingan. “We still maintain our buy recommendations on our selected industry themes on banking, consumer, and gaming with the highest upside as of the recent closing, which are Security Bank Corp., San Miguel Pure Foods Co. Inc. and Belle Corp.,” Estrella said.
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