Traders eyeing catalysts to shore up stock market

Share prices are expected to continue to consolidate between 7,000 and 7,300 points over the near term period as investors search for an additional motivation to put in more capital into the market.

Analysts said while the bellwether Philippine Stock Exchange Index (PSEi) index briefly tested the 7,300-point level, investors were still waiting for more leads to support the rally above mark, including fourth-quarter earnings and the gross domestic product report.

First Metro Investments Corp., meanwhile, expects the market to hit 7,800 to 8,100 points by the end of 2021.

First Metro first vice president and research head Cristina Ulang said in a press briefing over the weekend the domestic drivers for the market’s upside this year include the rollout of vaccine in the country, the re-acceleration of the growth of the economy, recovery in corporate earnings and the low interest rate and low inflation rate environment.

Vote-related spending will likely start pouring in during the last quarter of 2021 leading to presidential election in 2022.

Ulang also expects foreign funds to return to emerging markets like the Philippines as interest rates in United States and Europe remain low.

First Metro’s stock picks for this year include SM Prime Holdings Inc., Robinsons Land Corp. GT Capital Holdings Inc., SM Investments Corp, AC Energy, AREIT Inc., Metro Pacific Investments Corp., PLDT Inc., Globe Telecom Inc., DMCI Holdings, Manila Electric Co. and Wilcon Depot Inc.

Share prices last week traded mostly on sideways as market players monitored developments over the new variant of the coronavirus.

The index last week fell by 51 points to close at 7,238. Sectoral indices were mostly in the negative, led by property (-2.4 percent), and industrial (-1.2 percent). The services and financial sectors rose 1.2 percent and 0.5 percent, respectively.

The average value turnover stood at P10.5 billion while net foreign selling amounted to P40 million.

Foreign stock markets, meanwhile, struggled Friday as investors weighed a coronavirus vaccine delay against US President-elect Joe Biden’s $1.9-trillion stimulus plan, which had already been largely priced in.

Wall Street appeared unimpressed by the gigantic proposal, with all major indices dialing back further from the previous week’s record high closes as traders feared the incoming Democratic administration will hunt for revenue in the wallets of companies and consumers.

“Sentiment is being dampened… amid speculation that the increase in government spending could bring about higher taxes,” Wells Fargo Advisors said in an analysis.

The Dow finished 0.9 percent lower for the overall week, and the Nasdaq and S&P 500 both lost 1.5 percent for the same period. US markets are closed for a holiday on Monday.

In Europe, London stocks fell by almost 1.0 percent in Friday trading, with sentiment also dented by news that the UK economy contracted by 2.6 percent in November owing to virus curbs.

In the eurozone, Frankfurt and Paris were off by 1.4 percent and 1.2 percent, respectively, with increased travel restrictions said to be weighing on the mood as well. With AFP