Stocks are expected to move sideways this week, as valuation concerns and expectations of US interest rate hike give investors reasons to turn cautious over the short term.
“Next week, a probable month-end window dressing and the MSCI Philippine index rebalancing may guide stock flows. However, investors will also monitor global barometers, especially the ones for the June Brexit referendum and Fed rate hike,” RCBC Securities analyst Ralph Christian Bodollo.
The United Kingdom will have a referendum next month on whether it will stay in the European Union.
BDO Unibank Inc. chief investment strategist Jonathan Ravelas said while the market still had room to try the 7,500 to 7,625 levels in the near-term, technical indicators showed the market momentum was slowing down.
“Implications are that the market rally is losing steam and could be nearing a top. A confirmation break below the 7,350 level signals further weakness toward the 7000 to 7200 levels in the week ahead,” Ravelas said.
Analysts said with a Fed rate hike gradually being factored into prices, investors might start focusing on the economic momentum into the second quarter.
“With the incoming administration preparing its Cabinet line-up, institutional funds will wait for the final economic blueprint as reference, whether earlier initiatives from the outgoing administration will be upheld or improvised,” online brokerage firm 2TradeAsia.com said.
The Philippine Stock Exchange index, the 30-company benchmark, gained 112.65 points, or 1.6 percent, last week to close at 7,411.68 on May 27, on upbeat US markets and stable domestic condition.
Property index gained 5 percent last week, while mining and oil index fell 2.4 percent.
Foreign investors were net buyers last week of P1.96 billion. Top gainers last week were Alliance Global Group Inc. which climbed 7.6 percent to P15.30 and Megaworld Corp. which advanced 7.1 percent to P4.40.
JG Summit Holdings Inc. were among the biggest losers last week, as it declined 10.6 percent after founder John Gokongwei Jr. sold some stakes at a discount.