Today’s Stock Buzz- August 24, 2009
Market poised to resume its upward move
LOCAL STOCKS are likely to resume their rise this week, boosted by an extended rally in Wall Street and the scheduled announcement of the country’s growth rate for the second quarter, analysts said.
“Players will take their cue from Wall Street’s recovery during the long weekend…,” 2TradeAsia.com said.
The American Int’l. Group, Inc.’s plan to repay the US government’s lifeline and a 7.2% month-on-month and 5% year-on-year increase in sales of existing homes sent Wall Street stocks jumping on Friday, after rallying for the past three days.
The Dow Jones industrial average soared by 1.67% or 155.91 points to 9,505.96. The Standard & Poor’s 500 index rose by 1.86% or 18.76 points to 1,026.13 while the Nasdaq composite index climbed by 1.59% or 31.68 points to 2,020.90.
Local financial markets were closed on Friday because of a holiday to commemorate the slaying of Senator Benigno “Ninoy” Aquino, Jr.
The Philippine Stock Exchange index closed the week lower by 4.8% on Thursday, finishing at 2,720.18.
DBP-Daiwa Securities, Inc., meanwhile, said it expects the composite index to consolidate with an upward bias given improving economic fundamentals.
The government is due to report the gross domestic product (GDP) growth for the second quarter on Thursday.
Jun Calaycay of Accord Capital Equities Corp. said the government’s expectation the local economy grew between -0.1% and 0.9% with a contraction “possible but unlikely” has helped investors prepare for the worst.
“From the fundamental standpoint, the [government] has already conditioned the minds of investors of the possibility of a slow second-quarter [growth].
“This should tilt the market’s reaction to positive — in case the ’possible, but not likely’ scenario plays out,” he said.
Thus, the “play” for the second-quarter GDP is expected to have minimal downside, but with investors positioning for an upside should the result come out favorably, he said.
DBP-Daiwa Securities also pointed out: “earnings for April to June have shown significant progress as the average net income of stocks we cover rose by 35.1% quarter-on-quarter.”
“With this at hand, we think investors will continue to be encouraged by positive domestic developments…”
2TradeAsia.com, however, said some investors would check for momentum buildup before making their moves.
Should an upward momentum be absent, the online firm said they might opt to lock in gains during rallies.
For this week, “large caps under services, conglomerate, construction, property and banks might shine, along with shares that are sensitive to metal pricing movement,” 2TradeAsia.com said.
DBP-Daiwa Securities said it maintains its overweight stance on consumer-related stocks along with the media-related issues as these two have posted the most compelling results for the first half of the year, which it said could be sustained until the first half of next year due to election spending.
“We also reiterate our recommendation to buy on dips as basic economic fundamentals have shown improvement,” it said.
DBP-Daiwa Securities said the main index is seen trading between 2,675 and 2,800 this week.
Entry Credit: http://www.bworldonline.com/