By Denise A. Valdez
Reporter

PHILIPPINE SHARES are seen to decline this week with profit takers taking center stage and volatility still reigning due to the ongoing coronavirus disease 2019 (COVID-19) pandemic.

The benchmark Philippine Stock Exchange index (PSEi) dropped 139.18 points or 2.46% to 5,510.83 on Wednesday. The market was closed on Thursday and Friday in observance of the holy week.

Last week’s shortened trading resulted in a 3% climb for the PSEi on a weekly basis. This also marked the market’s third straight week of keeping its growth trajectory.

Value turnover rose 7% to an average of P5.72 billion, while foreign outflows grew 19% to an average of P834.89 million.

“Local equities advanced during the three-day trading week, given the slowdown in new coronavirus cases in industrialized economies,” online trader 2TradeAsia.com said in a market note.

It added the slight easing in headline inflation in March to 2.5% from February’s 2.6% also drove the market’s increase.

But for this week, local shares may start seeing declines and the main index may fall to the 5,000 level or lower.

“After three weeks of consecutive gains for the PSEi, we are expecting some profit-taking (this) week which could send it back to 5,000 which is a stronger support level. It may even go lower and fill the trading gap between 4,800 and 5,000 on the daily chart,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note over the weekend.

But should the market see strong buying, Mr. Mangun said this would likely be due to investors looking at the situation as a “once in a lifetime opportunity to buy equities at such depressed prices.”

“Some companies have already reduced capital expenditure for this year and are not expecting to turn a profit this year… On the other hand, some investors are optimistic that the temporary lockdown has given the government enough time to prepare… Either way, there is a strong case that the PSEi will stay above the 4,000 support level in the coming weeks…,” he said.

For 2TradeAsia.com, investors will also be keeping watch of virtual stockholders’ meetings and what companies would have to say about the impact of COVID-19 on their businesses.

It noted it is important to identify if the effects of the outbreak are one-off and may be reversed come second half of the year. “These components would help validate valuation angles, more on the extent of growth prospects post-COVID-19,” it said. “Expect volatility to prevail, with emotions still anchored in fending off the coronavirus pandemic.”

2TradeAsia.com is putting immediate support for the PSEi within 5,300-5,400, and resistance within 5,800-6,000. AAA Southeast Equities’ Mr. Mangun is pegging support within 4,700-5,000, and resistance within 5,500-5,800.

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