By Arra B. Francia
Senior Reporter

THE MAIN INDEX may decline in the week should foreign investors continue to dump their shares in the local bourse due to the negative sentiment from geopolitical tensions abroad.

The benchmark Philippine Stock Exchange index (PSEi) slipped 0.42% or 32.88 points to close at 7,795.98 on Friday. It dropped 0.74% on a weekly basis, marking its fourth straight week in the red.

Net foreign selling stood at P4.53 billion on the back of a P35.64-billion turnover. The banking sector suffered most as it lost 3.91%, with both Security Bank Corp. and the Bank of the Philippine Islands down by more than 5%.

“If we see another sell-off from foreign investors, then this market may see another week of losses. We also may see the market calm down as investors wait out this storm,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market report.

“The market is looking weaker and weaker by the day, and despite solid economic fundamentals and corporate earnings growth, it could not shake off the effect of these external headwinds.”

The PSEi followed most global stock markets which also ended lower last week as investors feared the possibility of a recession in the United States due to the US Treasury yield curve’s inversion.

An inverted yield curve happens when short-term bonds have higher interest rates compared to long-term bonds, indicating that investors see lower risks for long-term investments. Historically, this scenario has preceded every US recession since 1955.

On top of fears of a US recession, the trade war between the US and China has yet to see any new developments. In the meantime, US President Donald J. Trump has suggested to meet with Chinese President Xi Jinping to help resolve the Hong Kong protests.

Meanwhile, Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said the index will take its cues from Wall Street’s performance.

“The index will have to take its cues from US markets [this] week on a lack of clear and major catalysts for the PSEi,” Mr. Perez said in an e-mail.

On Friday, the Dow Jones Industrial Average jumped 1.20% or 306.62 points to 25,886.01, recovering after an 800.49-point drop midweek — its worst performance so far in 2019. The S&P 500 index also climbed 1.44% or 41.08 points to 2,888.68, while the Nasdaq Composite index went up 1.67% or 129.38 points to 7,895.99.

Investors are also looking at a shortened trading week as financial markets will be closed on Wednesday, Aug. 21, for Ninoy Aquino Day.

AAA Equities’ Mr. Mangun pegged the market’s support at 7,630 to 7,750, with resistance from 7,920 to 8,000.

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