By Arra B. Francia, Reporter
LOCAL EQUITIES are expected to get a push from the final version of the government’s tax reform program as the country’s legislators accelerate deliberations ahead of the Christmas break.
Week on week, the local bourse dropped 221.09 points or 2.71%.
“Our market didn’t manage to stay above (the 8,200 level) so I’m expecting the tax reform deadline this month may provide a cushion to this volatile market and it might push our market a bit higher before yearend,” Timson Securities, Inc. equities trader Jervin S. de Celis said in a text message last week.
RCBC Securities, Inc. equities trader Jeffrey Lucero noted the same, saying he would “want to see a package that is not significantly watered down.”
The bicameral conference committee, composed of members from both the Senate and House of Representatives, are hopeful that they can reconcile the two versions of the bill before Congress goes on break on Dec. 15.
Stark differences between the two draft bills include the revenues expected to be generated during its first year of implementation, where the Senate version computed around P130 billion against the House’s P133.8 billion. The two versions also have different tax rates on automobiles, sugar-sweetened beverages, fuel, mining, coal, cosmetic procedures as well as prescription drugs.
“But if that catalyst fails to buoy investor sentiment if the index fails to stay above 8,100 then we might see the start of the downtrend soon,” Mr. De Celis noted.
Online brokerage 2TradeAsia.com meanwhile attributed last week’s downward trajectory to “typical changing of hands.”
“Encountering skeptics is part of the trading process, especially for players who run short of their view of the entire picture of regional economies’ healthy mix of return and risks,” the online brokerage said in a weekly market note.
The bourse ended the week with all sectoral indices in the red, with the property subindex posting the biggest decline at 1.52% or 59 points to 3,808.92. The services sector meanwhile had the least losses at 0.78% or 12.62 points to close at 1,597.78.
The index likewise held a net foreign selling position of P190 million, from a net inflow of P1.22 billion recorded in the previous trading day.
“At the end of the day, it all boils down on expected yields, and aggressive capex (capital expenditure) line-up is among fund managers will be aiming for. The capex plan will help support growth outlook for 2018 and fundamental merits will be considered,” according to 2TradeAsia.com.
Analysts pegged immediate support of the market to be within 8,000 to 8,100, with resistance at 8,300 to 8,400.