THE MAIN INDEX is seen to close lower this week as investors continue reacting to the increasing tensions between the United States and China.

The bellwether Philippine Stock Exchange index (PSEi) ended Friday’s session down 65.30 points or 1.17% at 5,539.19.

While it closed with gains in three out of five trading days, the PSEi was lower 0.05% on a weekly basis.

AAA Southeast Equities, Inc. Research Head Christopher John Mangun attributed the weekly decline to “extremely low trading volumes,” as he said in a market note that most investors spent the week on the sidelines.

Value turnover last week went down 13% to an average of P4.01 billion. Foreign investors were still sellers, but net outflows were nearly halved to an average of P346.86 million.

“[M]ost investors are on the sidelines, not confident in holding riskier assets because of the current environment… (Turnover value) shattered the previous week’s record having the lowest trading value for a full week of trading,” Mr. Mangun said.

For online brokerage 2TradeAsia.com, market sentiment rode on the supposed development of a coronavirus disease 2019 vaccine by a US-based company and the friction between the US and China.

In the week ahead, Equity Trader Aniceto K. Pangan of Diversified Securities, Inc. said the market will likely fall further.

“Market will continue to go on consolidation from 5,400-5,700 depending on how the sentiment of investors develop on the prevailing issues such as the reopening of the economies around the world or the rising tension between US-China relations,” he said in a text message. “The investors’ sentiment will be swayed on which issues will be stronger.”

AAA Southeast Equities’ Mr. Mangun has the same forecast: “We go into (this) week expecting it to trade sideways as it has in the last four weeks, except now with a negative bias as investors have walked away from the market.”

The local market is closed Monday in observance of Eid al-Fitr.

Mr. Mangun noted the PSEi has been resilient, staying above the 5,350 support level since April. But now, most of that momentum is gone and investors are likely to sell due to the instability of the current environment.

For 2TradeAsia.com, the local bourse has been buoyed by onshore investors who look at the management of individual companies.

“One could easily gauge a tug-of-war between risk-averse mindset against those who truly believe in bargain-hunting for the long-term. Thus far, strong support is coming from the locals, especially those who truly believe in the management and advocacy of firms listed in the exchange,” it said.

2TradeAsia.com is putting immediate support within 5,400-5,500 and resistance within 5,600-5,700.

Mr. Mangun of AAA Southeast Equities is putting support within 5,350-5,500 and resistance within 5,850-6,000. — Denise A. Valdez

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