Bargain hunting to persist as blue chips decline
By Denise A. Valdez
Reporter
THE LOCAL BOURSE is seen to attract bargain hunters this week amid the decline in share prices of blue chips.
The bellwether Philippine Stock Exchange index (PSEi) closed flat in the last session — up 7.06 points or 0.09% to end at 7,623.41 on Friday. On a weekly basis, the main index lost 1.28% due to fears on the novel coronavirus and worries over the government’s ire on Ayala-owned companies.
Value turnover for the week was trimmed 11% to P6.57 billion on average last week as net foreign selling increased to P1.65 billion from P1.4 billion in the week prior.
In a market note, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said trading in PSEi-member stocks were generally muted last week, except for the likes of Ayala Land, Inc. (ALI) which saw a huge drop in prices following threats from Malacañang concerning its University of the Philippines-AyalaLand Technohub project.
Presidential Spokesperson Salvador S. Panelo said in a radio interview last Sunday that the government wants a probe of the contract between ALI and the University of the Philippines, alleging low lease rates for the university-owned land.
On the global stage, the novel coronavirus from Wuhan, China kept everyone on high alert throughout the week.
But for online brokerage 2TradeAsia.com, these “socio-political headlines” are projected to be a driver for activity in the local bourse this week.
“[W]hile attention might sway with current socio-political headlines, the timing appears ripe to gradually accumulate on large caps that have already breached attractive buy levels. Remember that recovery follows after the dust settles, especially for stocks with solid upside prospects,” it said in a market note.
Mr. Mangun said for his part that while global and local issues are pushing some investors away from the PSE, there are still some investors on the lookout for opportunities to maximize profit.
“If we see a decline in selling pressure next week, we might see bargain hunters come in and pick up shares to turn a quick profit. This may be enough to end the week with gains and possibly stabilize above the 7,700 level as it has done for most of last year,” he said.
2TradeAsia.com put the immediate support for the PSEi between 7,500-7,600 and resistance between 7,750-7,800.
Mr. Mangun said the PSEi may also benefit from the sustained optimism of retail investors who keep selecting companies that they believe will outperform for the year.
“The main index is currently trading between the range of 7,500 and 7,700. Looking at the last two years of trading, it doesn’t stay within this range for very long which means we are going to see it either come back and trade above 7,700 or lose all momentum and pierce 7,500 and test stronger support levels near 7,000,” he said.
