Shares may fall as volumes thin in shortened week

By Arra B. Francia
Reporter
SHARES may continue falling in the week ahead as investors stay on the sidelines ahead of the holiday break.
The bellwether Philippine Stock Exchange index (PSEi) jumped 1.39% or 97.49 points on Friday, managing to end on a positive note amid the sell-off that wreaked havoc on most international markets last week.
The main index’s weekly loss, however, still reached 3.04%, weighed down by the financial and property sectors which dropped 3% and 2.3%, respectively. Daily net foreign outflows averaged at P480 million, higher by 22% from the previous week on the back of a P4.9-billion average daily turnover.
“Despite the losses, the index managed to close above the key-support level at 7,000 after falling beneath it several times this week. Our market also performed better than our Asian peers…. The market’s performance this week is clearly an indication that we are not out of the woods yet.” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Analysts expect little activity in the market this week as financial markets will be closed on Thursday and Friday for All Saints’ Day and All Souls’ Day, respectively.
“With only three trading days next week, it is to be expected that we will see little action in the market as investors may stay on (the) sidelines and start the holidays before everybody else. By now it is certain that the index will end the month of October down two to three percent unless we see some window dressing,” Mr. Mangun said.
Online brokerage 2TradeAsia.com noted the same, saying it expects thinner participation unless “significant catalysts come up to re-entice investible cash into equities.”
The brokerage also warned about more volatility in global markets, which the PSEi has been mirroring for most of last week. Major US indices were down last week, with the Dow Jones Industrial Average losing 3% for the week. The S&P 500 index also fell 3.9%, while the Nasdaq Composite index shed 3.8%.
“Expect to see volatility in global equities, as fund managers run clueless in weighing the odds between ‘fear’ and ‘opportunities.’ US authorities are on a delicate balance in ensuring internal stability within their political sphere, while being in the midst of a gray zone on trade relations with peers,” 2TradeAsia.com said in a weekly market note.
On a technical note, Eagle Equities’ Mr. Mangun said the PSEi could find a bottom soon.
“Historically, October — December has always been a turning point for our market. In the last 18 years, buying the index between the fourth quarter and closing positions by the end of the first quarter of the following year has showed the least risk,” he explained.
2TradeAsia.com placed the index’s immediate support from 6,800 to 7,000, with resistance from 7,100 to 7,200.