PH stock market may see profit-taking amid weak peso

Share prices may move sideways with a downward bias this week, as the market’s four-week rally and a weakening peso could trigger profit-taking.

“Following a four-week rally, the local market could be weighed by profit-taking pressures. The peso’s weakness, if it extends, may also challenge the local bourse,” said Japhet Tantiangco, research head at Philstocks Financial Inc.

Despite the recent rise, Tantiangco said the market is still at bargain levels. The price-to-earnings ratio as of Friday stood at 10.7, below its five-year average of 14.4 and the regional average of 19.3.

Along with relatively cheap stock prices, Tantiangco said hopes that the Bangko Sentral ng Pilipinas will cut rates during its February meeting may provide market support.

Last week, the Philippine Stock Exchange index rose 1.84 percent to close at 6,464.67, while the broader all shares index jumped 1.46 percent to 3,652.33. The average daily value traded remained steady at P6.9 billion. Foreign investors were net buyers, with total inflows of P3.01 billion.

Meanwhile, Investment & Capital Corp. of the Philippines president Jesus Mariano Ocampo said the market’s strong start may not be sustainable given the risks.

“I think when the first-quarter numbers come out, it will be a reality check for a lot of companies,” Ocampo said.

If the market declines, Ocampo said the 6,000 level would be a good base before prices start picking up again.