Investors urged to be cautious amid stock gains

Posted at 12/09/2012 8:44 PM | Updated as of 12/09/2012 8:44 PM

MANILA, Philippines -- AB Capital Securities Inc., in its weekly outlook, advised investors to be cautious given the strong gains posted by Philippine stocks through the past two weeks.

“We see a slight possibility that having gone up too early and too soon calls for a moment of rest or consolidation,” AB Capital said in a research note.

The stock-brokerage firm noted that gains were largely unexpected at this point.

“We have already seen how fundamental valuations did not hold influence over the market this past week as share prices have continued to soar. While technical indicators likewise pointed to reaching overbought levels for stocks and the index alike, the current bullish sentiment might continue to propel the PSEi higher,” it said.

AB Capital pegged the “psychological” support at 5,500 points.

Philippine stocks continued their spectacular run, with the Philippine Stock Exchange Index (PSEi) hitting its 36th record high by the week’s close. The PSEi rose 2.22 percent to 5,794.20 points week-on-week.

“It was a warm welcome for December with investors pushing for a last hurrah this year. Although it seemed a little early, the bandwagon came in full and heavy as stocks soared to match the market’s bullish atmosphere,” AB Capital said.

“Gains were seen across the board with noteworthy performances from some banks, properties and holdings. Banking issues continued to soar despite valuations that surpass historical values,” it said.

Analysts have noted that sentiments were bolstered by a report that inflation came in at 2.8% in November, a five-month low. This would help support growth-oriented policies of the Bangko Sentral ng Pilipinas.

“Rating agencies’ confidence added to the optimism that the Philippines will remain as one of the strong economies in Asia this year and the next. External factors were snubbed all week as the focus was drawn to domestic matters,” AB Capital said.

Certain banking, conglomerate and real-estate stocks remain favored, based on COL Financial Group’s latest investment guide dated December 7.

The stock-brokerage house had “buy” ratings on BDO Unibank, Metropolitan Bank and Trust, Philippine National Bank, Ayala Corp., Alliance Global Group Inc., Megaworld Corp. and Filinvest Land Inc.

Investors will also be watching Manchester International Holdings, which will be the backdoor listing vehicle of Macau-based casino firm Melco Crown Entertainment, according to an overseas filing on Friday.