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Shares to decline amid weak investor sentiment

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SANTIAGO JOSE ARNAIZ

By Arra B. Francia
Reporter

LOCAL EQUITIES may continue to fall this week, as higher oil prices and faster inflation, among others, drag down investor sentiment.

The Philippine Stock Exchange index (PSEi) mounted a last-minute recovery on Friday, adding 0.14% or 11.09 points to close at 7,546.19. This allowed the market to recover from its lowest close in a year last Thursday, when it tumbled to 7,535.10, versus April 19, 2017’s 7,522.98 finish.

Week on week, the index dropped 2.26% or 174.83 points, weighed down by property which closed 2.6% lower; holding firms that slipped 1.3%; and financials that shed 2%.

“The consecutive three days of gains that we saw last week have proven to be a dead cat bounce, as it quickly reversed after testing the 7,800 resistance level. This did not come as a surprise as we expected the index to test the support level at 7,500,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a market report.

This week, Mr. Mangun noted that the PSEi could fall even further, potentially breaking the 7,500 support level.

“Based on market sentiment we will continue to see this market go lower… Investors are still worried about the different economic factors. Oil prices continue to rise which will push inflation higher. The Philippine peso has been another concern, it has stabilized at the P51.60 area after constantly testing its resistance at P52.40,” he said.

The analyst said for the PSEi to recover, trading volume would have to pick up first. Value turnover last week was down by 12% to an average of P5.3 billion per day.

Online brokerage 2TradeAsia.com, meanwhile, said that investors will turn to the Bangko Sentral ng Pilipinas’ policy review on May 10. This is after the United States Federal Open Market Committee decided to keep interest rates steady during its meeting last May 2.

“Markets have been anticipating for a possible 25-basis point hike, which we view as more responsive to control inflation and prevent further capital flight. Listed firms are also more aptly prepared, with majority of debt negotiated on fixed rate term,” 2TradeAsia.com said in a market note.

Investors will also be seeking clarity on the latest executive order on contractualization as well as details on the second package on the Tax Reform for Acceleration and Inclusion law, according to 2TradeAsia.com.

Several firms are due to report their first-quarter earnings this week. This includes PLDT, Inc., Globe Telecom, Inc., Energy Development Corp., First Gen Corp., Petron Corp., Manila Water Co., Inc., Ayala Land, Inc., Robinsons Land Corp., Ayala Corp., San Miguel Corp., and San Miguel Food and Beverage, Inc.

With this, 2TradeAsia.com cautioned against volatility in the market. The online brokerage placed the market’s immediate support at 7,400, while resistance may play between 7,600 to 7,700.