By Denise A. Valdez

PHILIPPINE STOCKS are expected to keep moving sideways this week amid an easing in worries over the novel coronavirus (nCoV) and the start of the release of corporate earnings reports.

The 30-member Philippine Stock Exchange index closed Friday’s session flat with a 0.69-point increase to 7,507.20. However, on a weekly basis, the main index jumped 4.25% to put an end to four consecutive weeks of decline.

“Sentiment went for a roller coaster ride during the week, although optimists won after China’s central bank injected liquidity with the resumption of onshore trades to counter the effects of nCoV,” online brokerage said in a market note.

The local market closed as low as 7,137.03 on Feb. 3 due to investor worries across the globe over the economic impact of the novel coronavirus. But the PSEi started recovering on Feb. 4 until it reached its highest close in almost two weeks at 7,507.20 on Friday.

“Mid-week, China’s Finance Ministry said they would slash tariffs on 1,717 US items from 10% to 5% starting Feb. 14… The rally was capped towards the end of the week, after death toll from nCoV hit 636 as of Feb. 7, with those infected already at 31,161,” said.

Value turnover last week surged 89% to an average of P7.238 billion, fuelled by the reentry of offshore investors into the local bourse. Net foreign buying hit P147 million to turn around from the P609-million net foreign selling during the week prior.

“Given most seasoned fund managers’ weak tolerance for nCoV’s unknown risks, expect liquidity to flock into fixed income instruments for now, especially with several listed firms floating their respective corporate notes,” the online arm of F. Yap Securities, Inc. said.

It noted that those that risked investing during last week’s “roller coaster ride” must have gained 5% from Feb. 3’s PSEi close of 7,137.03 and Feb. 5’s close of 7,507.20.

“While it is normal to err on the side of caution for now, it is also worth to consider reaping higher returns, ahead of the second quarter dividend season. Trade a range and position gradually on bargains with cash flows that have historically been resilient,” it said.

Aside from last week’s events such as Chinese central bank’s effort to boost liquidity and the local central bank’s reduction of overnight borrowing rates, said the PSEi’s catalyst may be the release of corporate earnings in the coming days.

“For now, sentiment would ride on the release of 2019 earnings, as well as recalibration of 2020 outlook, post-nCoV, Taal eruption, even ASF (African Swine Fever),” it said.

It also said hopes of finding a cure to the novel coronavirus soon may be a factor in getting the market back to normal. put immediate support on the PSEi at 7,400 and resistance between 7,600 and 7,650.