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Philippines: Market seen trading with downward bias
The main index is seen trading at a downward bias, as it remains overvalued, making it susceptible to profit taking.
Philstocks Financial Inc. senior research analyst Japhet Tantiangco said that as of last week’s closing, the market is trading at a price-to-earnings ratio of 21.8 times, which is above its 2015 to 2019 average of 18.4 times.
“Investors may book gains ahead of the upcoming holidays, especially if there would be no positive catalyst for the market,” Tantiangco said.
He also noted offshore worries, which could weigh on the sentiment, including a possible no-deal Brexit and the US congress’ economic stimulus negotiations.
On the other hand, Tantiangco said positive catalysts might help pull the market up, such as the progress on fiscal policies to support the economy next year, narratives pointing to the availability of a vaccine for the coronavirus disease 2019 (Covid-19) in the country soon and the resolution of worries abroad.
Tantiangco sees the local shares trading from 7,150 to 7,500 this week.
Meanwhile, the research of AAA Equities expects the Philippine Stock Exchange index (PSEi) to continue its sideways movement until year-end.
“The sideways movement allows it to build momentum for a bigger move. The longer it moves sideways, the bigger the move. We continue to believe that the market will generally move higher as companies recover, however, we are not out of the woods yet and any unpleasant surprise can alter its trajectory,” AAA Equities said.
It noted that the local market is still down by around 7 percent from the beginning of the year and that they do not expect it to recover all its losses for the year as concerns remain.
For this week, AAA Equities sees immediate support at 7,200 and resistance at 7,300.
The research added that the local bourse may continue on lower to their original year-end target of 7,000, should selling pressure and volatility pick up.
The benchmark PSEi finished last week in the negative territory after it shed 0.35 percent or 25.22 points to finish at 7,272.80 on Friday.
Source: https://www.manilatimes.net/2020/12/21/business/business-top/market-seen-trading-with-downward-bias/814654/