Trading Outlook for March 11, 2010
Positive momentum might spillover Thursday, especially after European Commission President Romano Prodi gave an assuring statement Greece’s financial woes are 'over'. This might be aided by positive economic data at home, starting from improved exports for January (+42.5% year-on-year) as well as foreign direct investments for 2009 (+28%). Largecaps especially utilities, might lead the ascent, as well as select inflation-hedge plays (metals, property). Position on weakness & trade a range. Immediate support is 3,100, resistance at 3,150.

Weekly Outlook for 08 - 12 March 2010


Separate the wheat from the shaft
Tame inflation.  February's local headline inflation came in at the low-end of what most market watchers expected (4.2% versus 4.3%), largely driven by reduced food, beverage & tobacco prices (+3.8% against +4.3%), as well as housing & repairs (+1.8% against +2%). While skeptics might still heed for sequel month's inflation numbers, part of the psychological boost stems from the fact the numbers are still single-digit, which should aid in improvement of consumer demand growth. Moreover, business costs are likely to remain 'tame', supporting listed companies' capex rollout initiatives this year. While most might still exercise caution following the lagged effect on pricing from El Nino weather pattern, coupled by intermittent interruptions in electricity generation & distribution lately, the fact remains expansion would still be supported, as economies emerge from a relatively low base last year. Lastly, the local central bank has kept a tight watch on liquidity growth, even with an approaching election spending-driven season this May.

Track turnover gauge.  This week, local & foreign investors will heed for fresher catalysts, specifically those that would help drum-up momentum in equities. Based on last week's last 2 days of trading, activity slowed to about P2.5bn on average, against prior session's P3.3bn. Any recovery above the P3bn mark would be lauded, as prevalence of weak turnover might indicate investors' possible switch to a 'wait-and-see' stance on the market. Balance portfolios by holding on defensive bets, and stocks that are likely to benefit from positive spins over the near-term. It would be timely to check on which stocks would be worth holding for the long-range (e.g., more than a year), and issues that can be traded for the short-term. Immediate support is 3,000, resistance at 3,070-3,090.