Bourse may lose half of last year’s gains

Neil Jerome C. Morales
BusinessWorld

SHARE PRICES will be in for a “bumpy ride up” this year as investors take profits from an oversold stock market last year, according to a brokerage.

The main stock index might lose more than a third to about half of last year’s gains and settle at around 2,500 from end-2009, before rising by about 10% at the end of the year as part of a “technical correction,” a report by CitisecOnline.com read.

Investors may have to wait for a year and a half before seeing a bullish market, analysts said. But stocks will remain attractive investments, the brokerage’s analysts said in a briefing Tuesday.

“2009’s recovery was decorous but 2010 will temper its moves with corrective price adjustments,” said Juanis G. Barredo, chief technical analyst.

April Lee-Tan, head of research, said the correction will involve 38%-50% of the 1,400-point rally that brought the stock index above the 3,000 level in December.

Investors “overbought” local stocks for five to six months last year, Mr. Barredo noted.

The local bourse recovered yesterday, with the Philippine Stock Exchange index (PSEi) up by 0.72% or 20.63 points to 2,884.81, from a fresh three-month low Tuesday. The PSEi slipped on Monday by 2.4% or 69.98 points to 2,883.21, marking the biggest decline since the 2.77% slide on Aug. 17 last year. Read more...