Market players would likely wait and see, taking cue from the major stocks markets abroad as investors digest developments from the report of Dubai World’s loan default payments.

BPI Securities noted that the composite index fell by almost 45 points on Friday apparently spooked by news of Dubai World's default on loan payments.The UAE real estate developer was saddled with US$59 billion in debt.

Leading the index lower was ALI, which alone accounted for about a third of the day's losses. Other losers were PLDT, Philex and Meralco.

Analyst Prince Anthony Yeung of AB Capital Securities noted that the local stock market continued its consolidation phase.

The PSEi has been consolidating since it breached 3,000. Week on week, the main index lost 23.76 points or 0.77%.

Yeung says the loss was mostly due to the development in Dubai that gripped global equities on Thursday and Friday.

Dubai World, a large development engine of Dubai, has asked its creditors if it can delay its payments by 6 months. The news sent fears all over the world and had investors flocking to less risky assets. Global equities fell although US markets were closed for a holiday.

“Despite ending on a bad note, the month of November was a good one for the local stock market. It is the third best month of 2009 so far with a gain of 136.47 points or 4.69%,” says Yeung.

The PSEi was also able to break the resistance at 3,000 during the month. The index hasn't gone below 3,000 since.

“The market was buoyed by optimism emanating from the US while rosy third quarter performances from local companies also helped push share prices higher. However, the market has been unable to push higher, consolidating instead around 3,050.”

Yeung expects the development in Dubai would continue to unfold and might even worsen depending on how the world perceives Dubai World's ability to pay its debts in 6 months time.

“The initial reaction has been a flight to quality and this does not bode well for emerging markets if it persists.”

The PSEi is up 62.58% since the start of the year. There are those that will be locking in their profits ahead of the new year. Opposing them will be those that believe the local stock market still has a strong upside and will stay in the market, says Yeung.

Only select blue chip shave been moving higher lately and it might be wise to start locking in on some profit.

Yeung also expects the market to stay within 3,000 and 3,100 this week unless a strong catalyst enables it to break either. (EHL)