Stock market flat; investors in wait-and-see mode
Credit to Author: The Manila Times| Date: Mon, 28 Jan 2019 16:19:39 +0000
THE stock market ended flat on Monday after rising by as much as 1 percent during intra-day trading, with investors said to have turned cautious given upcoming events such as a US Federal Reserve policy meeting and US-China trade talks.
The benchmark Philippine Stock Exchange index (PSEi) rose to as high 8,143 but then lost steam to end the day up just 0.009 percent or 0.72 points at 8,053.92. The broader All Shares rose by 0.06 percent or 2.76 points to finish at 4,856.38.
“Early morning, we saw a good rally from the market caused by optimism over the upcoming US-China trade talks,” Philstocks Financial Inc. research associate Japhet Louis Tantiangco said noted.
This was echoed by Timson Securities Inc. trader Jervin de Celis, who added that the market also tracked Wall Street gains said to have been supported by talk that the US central bank would hold off from hiking interest rates.
The US Fed’s policymaking body will hold its first meeting for the year from January 29 to 30 while trade talks are scheduled for January 30 to 31 in
Washington in attempt to end the US-China trade war.
“Investors are waiting for cues from these events” after optimism earlier in the day, De Celis said.
Diversified Securities Inc. trader Aniceto Pangan said market players were also in wait-and-see mode over the approval of the 2019 national budget, which is being finalized by a bicameral conference committee.
Asian markets were mixed on Monday, with Tokyo down 0.60 percent, Shanghai by 0.18 and Hong Kong flat at 0.03 percent.
Locally, sectoral results were mixed with the holding firms, industrial, and property indices losing by 0.68 percent, 0.39 percent, and 0.22 percent, respectively.
More than 1.68 billion issues valued at P9.1 billion were traded.
Losers led winners, 108 to 102, while 44 issues remained unchanged.
Market upside ‘capped’
As this developed, brokerage firm COL Financial Group Inc. warned that the stock market’s strengthe could be capped this year given global and other risks.
In a news briefing, COL Chief Equity Strategist April Tan said that factors such as a twin deficit, slower investment and government spending, and slower global economic growth could dampen investor sentiment.
“I feel like we have to be cautiously optimistic because the upside is capped,” Tan said.
As of Monday’s close, the PSEi is already up by 7.87 percent from the 7,466.02 finish posted in the last trading day of 2018.
COL, which said it had a favorable outlook on banking, property, cement and airline companies, expects the benchmark index to end at 8,600 this year.
The Bangko Sentral ng Pilipinas expects the budget deficit to settle at 3.2 percent of gross domestic priduct this year and 3 percent in 2020 up to 2022, while current account deficit is forecast to settle at 2.3 percent of GDP.
“If the government pursues the ‘Build Build Build’ program we will continue to stay at a high level of budget and current account deficit,” Tan noted.
Delays in the approval of the 2019 budget, meanwhile, will weigh on growth.
“In the past few years, you will notice how government spending and investment spending have increased faster than GDP … slower growth on both sides … would really have a drag,” Tan said.
“The two already account for 35 percent of GDP so they will have a bigger impact now.”
Exports and and overseas remittances, meanwhile, will be hurt by slower economic global growth, she said.
FROM REPORTS BY ANGELICA BALLESTEROS
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