Tepid trading expected this week

Share price are expected to continue trading sideways this week despite positive developments on the US-China trade talks.

Analysts said investors would likely remain on the sidelines and wait for the trading volume to significantly improve that could signal an active market and a breakout in the current trading range.

While a Santa Claus rally could still happen, analysts expect it to be a short bounce or a technical rebound from the previous week’s decline.

One factor that could boost the market moving forward is the recent pronouncement that Bangko Sentral ng Pilipinas might consider cutting rates by about 50 basis points (bps) in 2020.

The Monetary Board on Thursday decided to hold key interest rates in its eighth and final meeting in 2019.

The Philippine Stock Exchange Index last week rose 1 percent to 7,877.63, while the broader All Shares Index climbed 0.4 percent to 4,662.07 on weak trading volume.

Except for holding firms which declined 1.5 percent, all other sub-indices ended in the green led by property, gained 2.3 percent; industrial which advanced by 1.72 percent, services which rose 1.72 percent, financials which increased 1.5 percent; and  mining and oil index which added 0.05 percent.

Foreign investor were net sellers for the week by P1.42 billion, while the average daily value traded declined to P5.6 billion from the previous week’s average of P6 billion.

Soft drink maker Pepsi-Cola Products Philippines Inc. emerged as the week’s top gainer, after its share price jumped 40.74 percent to P1.90. The company reported that South Korea’s Lotte Chilsung Beverage had made an offer to acquire up to 2.134 billion common shares in the local at a tender offer price of P1.95 apiece.

Other top gainers include Jollibee Foods Corp., which surged 9.5 percent to P221, and Universal Robina Corp., which advanced 6.6 percent to P145.

Weekly top price losers were Manila Water Co. Inc., which slumped 38.5 percent to P10.02, and Metro Pacific Investments Corp., which fell 17.7 percent to P3.01 after the board of the Metropolitan Waterworks and Sewerage System voted to cancel the contract extension of Maynilad Water Service Inc. and Manila Water.

Meanwhile, London stocks and the British pound jumped Friday after an election triumph for Conservative Prime Minister Boris Johnson that analysts said will bring clarity to Brexit proceedings and unlock stronger economic growth.

Other European stock markets–although lagging buoyant London, which rose over two percent at one point—also powered ahead, supported by confirmation of a partial trade deal between the United States and China.

However, Wall Street’s rally petered out, with American equities finishing little changed on the day both Beijing and Washington finally said they were on the same page.

Stocks had rallied Thursday in anticipation of the trade deal with China, but then declined when the pact was announced.

“You got a pretty good example of ‘buy the rumors and sell the news,’” Art Hogan of National Holdings told AFP, referencing the saying indicating equities rise more in anticipation of an event than after the event itself.

“But it’s certainly great news on Brexit and US-China trade war.” With AFP