MARKET OUTLOOK
Shares may continue trading sideways albeit with an upward bias as investors watch out for April inflation data, the central bank’s policy meeting, and Q1 earnings reports this week.
The market may continue within a tight 7,800-8,000 range for a few more weeks, but market participants are inclined to believe that this market is going to go higher.
Economic fundamentals are sound at present and even corporate earnings are expected to perform better than that of 2018.
Investors are expected to take cues from the central bank’s policy meeting on May 9. With the central bank research department projecting inflation to be within a 2.7% to 3.5% range, the Monetary Board may move toward policy easing or cut the reserve requirement ratio (RRR).
Any rate cut or RRR adjustment might still be countered by higher oil prices, prolonged El Niño’s impact on water and agri resources, as well as increased power rates. Overall, local equities might take heart if easing is supported.
The Philippine Statistics Authority will also release key economic indicators this week, namely April inflation data on May 7 and Q1 gross domestic product (GDP) report on May 9.
Sentiment is skewed towards slower Q1 GDP growth, citing downward revisions in estimates from the International Monetary Fund at 6.5% from 6.6% and Asian Development Bank at 6.4% from 6.7%, among others.
World Bank estimates were unchanged at 6.4%. Forward valuation on equities may get the lift, in case growth expectations improve for succeeding quarters.
Aside from the release of economic figures, this week will also see the release of Q1 earnings results of companies that comprise 40% of the PSEi and 30% of the all-shares index.
These include Globe Telecom, Inc., Ayala Land, Inc., SM Investments, Inc., LT Group, Inc, Ayala Corp., International Container Terminal Services, Inc., San Miguel Corp., and Puregold Price Club, Inc.
The main index’s support level is placed at 7,800 to 7,900, with resistance from 8,000 to 8,140.
