Shares seen sideways amid outflows, lack of leads

By Arra B. Francia, Reporter
SHARES are seen to trade sideways in the week ahead as the market tries to bounce back from this year’s record low, amid the continued outflow of foreign investors and lack of positive leads.
The bellwether Philippine Stock Exchange index (PSEi) climbed 1.74% or 120.39 points to close at 7,004.77 on Friday, recovering from Thursday’s plunge into the bourse’s record low finish of 6,884.38 for 2018. The main index joined the global equity sell-off last week, which showed the Dow Jones Industrial Average skidding to a eight-month low.
“Overall, our market performed better than the rest of the global markets… It could be because of the fact that western markets are coming off recent highs while our market has been taking a beating for most of the year,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market note.
On a weekly basis, the index dropped 1% or 73 points, weighed down by holding firms, which dropped 2.2%, and financials, which was down 1.6%. Turnover inched up by a percent to P4.82 billion.
Foreign investors dumped more funds, with average net foreign outflows rising by four percent to average at P555 million per day last week.
“Friday’s rebound should see some follow-through support, which backs up our range-trading view on the market. The important thing to remember is surviving the volatility, until external anxieties ebb,” online brokerage 2TradeAsia.com said in a weekly market note.
The online brokerage noted that while inflation, the weaker peso, and higher interest rates are still “top-of-the-mind” for investors’ watch list, they should also look at economic growth.
“Despite recent downgrades from multilateral institutions (e.g. International Monetary Fund, World Bank), the fact exists they still see growth, albeit at a slower pace versus their earlier bullish tone at the start of the year,” 2TradeAsia.com said.
For Eagle Equities’ Mr. Mangun, the index’s performance this week will rely on foreign investors.
“The index is struggling to stay above 7,000 and local investors are doing their best to support this market. However, the bottom line is that we will not see any significant gains in this market until we see foreign outflows slow down,” Mr. Mangun said in a weekly market note.
Mr. Mangun mapped out two scenarios for the index in the week ahead, saying it could either move sideways and stay above the 7,000 level or fall and test the next support level of 6,800.
“Based on market sentiment, there is a stronger possibility of the latter scenario. Majority of investors will continue to stay on the sidelines while foreigners are dumping and let the market decide what it’s going to do. The result is lower trading volumes,” he explained.
2TradeAsia.com placed the market’s support at 6,900 to 7,000, while resistance could be from 7,200 to 7,250.