By EDU H. LOPEZ
Investors are positioning on selected blue chips and mining issues ahead of the third quarter corporate performance amid the oil prices and the political uncertainty during the period.
BPI Securities says: "Investors may want to see a few net profit reports before they decide to buy in."
"We expect that investors will shift their focus from politics to earnings results once the companies start to announce their net income performance. Third quarter earnings results are expected to be out by the end of this month or early next month," says BPI Securities.
PLDT would announce its third quarter performance on November 8, while Pilipino Telephone will report on November 7. Ayala Corp. will release their earnings results by November 11.
Investors may be expecting robust earnings. Earlier, Piltel said that the peso’s strength against the yen in the first nine months of the year has boosted its profit by more than
P600 million. There were also reports that PLDT expects third quarter earnings to match the second quarter performance.
Market players are also closely observing government’s will to implement fiscal reforms such as the EVAT law. The temporary restraining order (TRO) on the EVAT law is expected to be lifted by next week.
But investors’ outlook remain cautious due to continuing political concerns and the volatility of oil prices. The political foes of President Arroyo have raised concerns that she might declare martial law, says BPI Securities.
Analysts Jovist Vistan and Erwin Balita of AB Capital Securities expect to see another tight market this week with the PHISIX likely to consolidate within a narrow fifty point range. "However, we wouldn’t be surprised if stocks finally make a more pronounced move."
"The PHISIX is already at the apex or converging point of a big symmetrical triangle, it should make a major move anytime now. The important questions are: When and will it be up or down? There is no strong bias established as investors continue to have a cautious outlook on the equities market."
Vistan and Balita noted that some traders are also unwilling to take positions in the absence of fresh leads and ahead of the upcoming long weekend.
Guidance will come this week from the Supreme Court, which will finally decide on the fate of the expanded value added tax law. Another catalyst in the short term is the release of third quarter corporate earnings results.
"The market is very concerned of the impact of high gasoline prices and political uncertainties on corporate earnings. The market should respond favorably if earnings would be in line with earlier expectations," said Vistan and Balita.
