Corporate earnings seen top of investors’ minds

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BARRING any jarring global development, investors in Philippine stocks will likely have their eyes glued to more corporate earnings data that will be released this week, analysts said over the weekend.

Corporate earnings seen top of investors’ minds

The Philippine Stock Exchange index (PSEi) dropped 0.11% or 9.34 points from Thursday to close at 8,372.51 on Friday last week, as investors stayed on the sidelines in the wake of mounting warnings of a trade war after United States President Donald J. Trump’s announcement of tariffs on aluminum and steel.

A further pickup in inflation last February — reported at 4.5% based on 2006 prices and 3.9% based on 2012 prices — has also made some investors cautious, despite widespread expectations that the pace of overall price increase of basic goods will quicken further, possibly piercing the ceiling of the government’s 2-4% target range this year.

“Value turnover was P35.76 billion [for the week], which is below average for our market,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a report.

“This proves that investors are still on the sidelines.”

PSEi lost 1.017% on a weekly basis, with the mining and oil sector posting the biggest drop of 3%, followed by financials that gave up 1.6% and holding firms that fell by 1.3%.

This week, the focus will switch to the release of more corporate earning reports as well as listed firm’s outlook for 2018.

“Just like other listed shares, the focus should now be on companies’ capex deployment for the year and attributes that go with it in terms of plowback to the earnings cycle,” online brokerage said in a note.

Firms lined up to report 2017 earnings this week are Ayala Corp.; Security Bank Corp.; San Miguel Corp.; San Miguel Pure Foods Company, Inc.; Petron Corp.; Ginebra San Miguel, Inc., LT Group, Inc., Philippine National Bank and Max’s Group, Inc. said investors may also watch the US Federal Open Market Committee’s March 20-21 meeting which some analysts believe could yield a rate hike.

Eagle Equities’ Mr. Mangun said the market continues to consolidate from successive gains in January.

“It has held our support at 8,330 which may be a pivot level and we may see the market start to recover,” Mr. Mangun said.

“The other scenario is if support is broken at that level we may lose another 200 points as it tests our next major support at 8,070,” he added.

“… [W]e need to see more volume before we see the market recover.”

Analysts also said investors should watch less-known listed firms that have been accumulating value in past weeks due to speculations about the third major telecommunications service provider that will challenge Smart Communications, Inc. and Globe Telecom, Inc.

Mr. Mangun placed initial market support at 8,250-8,330 and resistance at 8,550-8,700. — Arra B. Francia