LOCAL SHARES are seen to decline this week on lasting worries about second waves of the coronavirus disease 2019 (COVID-19) pandemic.

The local bourse kicks off a four-day trading week today as it was closed for trading on Monday in observance of Eid al-Fitr. The benchmark Philippine Stock Exchange index (PSEi) closed at 5,539.19 on Friday, down 0.05% on a weekly basis.

Online brokerage 2TradeAsia.com said the market might be more volatile this week as investors balance the news of increasing global COVID-19 cases and rising hopes of the development of a vaccine.

“The fact that the coronavirus is ‘novel’ spells unpredictability, as there are no comparative cases in history to match its clout. At this stage, science is on ‘trial-and-error’ mode, especially for advanced diagnosis for asymptomatic-positive cases…,” it said in a market note.

“For now, a delicate balance must be made relative to getting economies restarted and inhibiting progression of new virus strains. Anything that could alter or jolt either of these lead variables would further extend the recovery process and present new challenges for global equities markets,” it added.

For AAA Southeast Equities, Inc. Research Head Christopher John Mangun, what might push the market lower is expectations of a greater economic toll of the quarantine in April and May, which will be reported in the coming weeks.

“Our market will continue moving sideways and perhaps even test support at 5,000 towards the end of the second quarter as economic data will be worse than the previous quarter,” he said in a market note.

Still, he said he is optimistic that the third and fourth quarter would show some improvement, especially as quarantine measures are starting to ease, allowing the economy to recover.

“[W]e also believe that this market will move higher toward the end of the year as the economy will come back stronger in the third and fourth quarter if everything goes well with the containment of the pandemic and the restarting of the broader economy,” he said.

In the Philippines, there are lingering hopes that this is Metro Manila’s last week under modified enhanced community quarantine and that it will transition to a general community quarantine (GCQ) by June 1.

Majority of the Metro Manila Council, the group of mayors of Metro Manila cities, have favored transitioning the capital to a GCQ starting next week.

2TradeAsia.com said support for the market will come mostly from local investors so any development in the Philippines’ handling of the pandemic may trigger the movement of the market.

“While caution is to be expected (as can be gleaned from frail momentum improvement), investors positioning at the market’s present state must be prepared to take on a pro-active view on global economies’ healing and recovery,” it said. — Denise A. Valdez