Stock market seen to resume climb

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MANILA, Philippines - Philippine share prices will likely resume their ascent to record highs this week, buoyed by expectations of favorable first quarter earnings results and optimism on the domestic economy.

"With corporate earnings still on the crosshairs of equity investors, the index is expected to resume its northern trek, restoring the 5,300-line, possibly rewriting record books for the 20th time this week," said Jun Calaycay of Accord Capital Equities Corp.

Initial resistance will be met at the record intra-day high of 5,320 to 5,330, he said.

On Thursday, the benchmark Philippine Stock Exchange index (PSEi) surged to a new record of 5,300.41. It hit a new intra-day high on Friday before succumbing to profit-taking.

But a sharp slowdown in US hiring in April may pull back the PSEi temporarily and test support at the 5,260-line. On Friday, the Dow Jones industrial average closed down 168.32 points, or 1.3 percent, to 13,038. 

The US Labor Department on Friday reported that job growth weakened in April for a second straight month, sparking fears that the recovery of the world's biggest economy may be faltering.

"The market may encounter some profit taking next week as current high valuation may discourage investors to come in.  Buying interest still looks strong but selling pressure at lofty prices is equally strong," AB Capital Securities Inc. said last Friday.

The brokerage noted that the market was trading at 18.9 times trailing price-earnings, which is way above the five-year average of 13.3 times.

The PSEi may end the year between 5,600 and 5,800, representing an annual growth of 28 and 33 percent, respectively, as the reversal of last year's tempered public spending, recovery in exports and sustained inflow of remittances offset concerns overseas, Calaycay said.

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