PHILIPPINE STOCKS, which are now trading at 32-month highs, still have room to rise further but will likely encounter some stumbling blocks before breaking into all-time highs, according to First MetroInvestment Corp.-University of Asia & the Pacific.
“Technical conditions continue to be positive as the bulls put on an impressive display in the PSEi,” said FMIC-UA&P in their latest monthly research.
But the report said pullbacks would likely occur before the index sets higher highs. The local index hit a record of 3,873.50 on Oct. 8, 2007.
“Any consolidation will be constructive as it will allow the PSEi to breathe and sustain the upside trajectory. Investors should take advantage of dips rather than be sellers on highs,” the report said.
The main risk to watch out for, the report said, would be if and when the PSEi neared its pivot lows of 3,400.
“So far, odds of it happening are slim, unless negative developments abroad overwhelm local sentiment,” the report said.
Over the near term, the report said the weak economic recovery and excess liquidity in the developed markets might lure more investors to buy into emerging markets.
“Strong macroeconomic fundamentals coupled with the robust first-half corporate profits will maintain a formidable foundation for the Philippine equities market,” the report said.
But as the local market cannot get away from the headwinds overseas, FMIC-UA&P said investors should remain cautious as fears of declining global growth could affect risk appetites.
Over the long term, FMIC-UA&P said positive earnings of local corporations would likely continue to keep the local bourse buoyant.
“Moreover, the economic and political policies of the new Philippine president may further increase investor’s risk appetite as his first State of the Nation Address kicked off greater optimism in both the equities and bond markets,” the report said.
Published in Philippine Daily Inquirer September 3, 2010.
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