MANILA, Philippines – Stock market analysts see only “minor corrections” in the upcoming week but are still bracing for a “major” one.
In its weekly report, financial services company AB Capital Securities Inc. recommended investors to hold their positions.
“We think that valuations will likely remain high next week with little room to the downside. We only see minor corrections for the week ahead as we think there is still so much liquidity on the sidelines,” said AB Capital analyst Gregg Adrian Ilag.
“We recommend investors to hold positions as we think a major correction is yet to occur unless substantial amount of liquidity is taken away or there is significant change in market sentiment,” he added.
Ilag warned of a “bearish divergence,” which indicates a correction in the “near term.”
“This has already been going for several months now indicating a correction for the near term. If a correction is to occur, the first target would be at 4,982,” he said.
Last week, the Philippine main composite index hit a new all-time high at 5,219 driven mainly by “investor exuberance” on the liquid financial system, he said.
Despite mixed market sentiment overseas, the Philippine Stock Exchange Index closed last Friday up 1.16% week on week.
Ilag noted that the gains last week could be attributed to the anticipation of GT Capital Holdings’ listing debut last Friday.
GT Capital, raised as much as P18.753 billion at an offer price of P455 per share. GT Capital shares soared 8.13% on its first day of trading.
“There was much anticipation over GT's IPO as shown by the over subscription of investors,” Ilag said.
This week, he said investors will be looking at the economic data from the United States, which will release its preliminary gross domestic product numbers.
“These data will be able to make further confirmation of where their economy is heading,” Ilag said.
AB Capital also said it is still recommending First Philippine Holdings Corp., its unit Energy Development Corp., and nickel miner Marcventures Holdings Inc. “as fundamentals on these stocks appear attractive.”