By Denise A. Valdez

LOCAL SHARES are expected to decline further this week as the country continues its efforts to stop the spread of the coronavirus disease 2019 (COVID-19).

The 30-member Philippine Stock Exchange index (PSEi) improved 155.34 points or 3.36% to 4,778.76 on Friday. But this is lower by 1,015.18 points or 17.5% on a weekly basis, marking the fourth week the PSEi moved downward.

Value turnover during last week’s three-day trading week averaged P7.51 billion, 3.7% up from a week ago. Net foreign selling stood at P1.27 billion from P748.05 million the previous week.

Trading was suspended from March 17-18. It recorded its biggest single-day drop of 711.95 points or 13.34% to 4,623.42 when it reopened on Thursday. It also fell by as much as 24.29% to 4,039 in the intraday that day.

“[W]e expect another volatile week ahead in the market, and bias on the downside as COVID-19 cases in the Philippines are mounting and showing no sign of subsiding yet,” Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a text message. “Many investors will still rush to have cash on hand due to the enhanced community quarantine in Luzon, which can drag the bourse further.”

The Health department reported 380 confirmed cases of COVID-19 in the Philippines as of Sunday morning. The virus has already killed 25 patients, while 15 have recovered from the illness.

Online brokerage said the effort of the government to put Luzon on lockdown will have to come at the expense of economic growth.

“Authorities are therefore in a precarious (and unprecedented) balancing act, leaving markets to spiral into speculation, and price-in longer storms,” it said in a note.

It noted that the problem remains a medical issue, therefore stimulus packages that try to pump out liquidity, while appreciated, may not be enough in the end. “[W]ith no hands to deploy said liquidity at the household level, markets will have to digest paltry earnings expectations, and favor safer heavens, at least for now,” said.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said on Friday that he expects growth to fall within just 5-5.5% this year, below the government’s 6.5-7.5% target. Philstocks’ Ms. Alviar said this may cause a weakening in investor sentiment as the market prices in this new outlook following earlier forecasts of strong economic growth. said what could help lift the market are investors hunting for sectors whose cash flow models are insulated, like telecoms and companies operating outside Luzon. Another are those betting on the recovery of worst-hit stocks like airlines.

“Advocates of the same with ample liquidity and stretchable time horizons will see the dip as opportunity to arbitrage the time difference (albeit gradually),” it said. It put immediate support at 4,000 and resistance at 5,000.