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MANILA - Local share prices may remain in consolidation as investors set sights on the remaining companies that have yet to report second-quarter earnings.
"With the market currently in a short-term limbo and sentiment becoming neutral, it is very likely that we will see stocks remain in a consolidation mode [until] the first week of September," said AB Capital Securities Inc.
Bias could be negative and the short-term pullback could drag down towards the 5,200 psychological support level, which is also the 50-day exponential moving average of the PSEi, the brokerage said, referring to the Philippine Stock Exchange index.
However, the market's support bases are still within an ascending channel, indicating willingness of participants to seize the weakness and reposition, said Freya Natividad, investment analyst at 2TradeAsia.com.
"We believe this trend would be prevalent over the short-term, as the market digests the release of interim results from large-caps to revalidate growth expectations," Natividad added.
Investors will continue to keep an eye on the remaining quarterly results, but they may not be enough to justify the market's valuation at 18 times trailing 12-month earnings, AB Capital said.
"As the views on the broad economic fundamentals tend to cancel each other out, earnings become a principal fulcrum on which trading and investment decisions revolve. The results, thus far, both here and in the US, are mixed, albeit slightly tending towards the positive," said Jun Calaycay of Accord Capital Equities Corp.
Optimism for more stimulus from global central banks continue to lift investor sentiment as the Dow Jones Industrial average rose 42.76 points, or 0.3 percent, to 13,207.95 on Friday.
"Expectations that regional central banks would push for a coordinated approach relative to monetary measures will keep hope afloat for the remainder this year. This may include considerations over retaining the present low benchmark interest rate, or cutting these further," said Natividad.
"Europe remains a source of concern with worries about a potential Spanish bailout keeping investors on edge. Europe's debt problems haven't shown much improvement as borrowing costs for Spain and Italy are uncomfortably high," said AB Capital.
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