LOCAL SHARES are expected to maintain a downward bias this week as weak investor sentiment over rising cases of coronavirus disease 2019 (COVID-19) patients prevail.

The bellwether Philippine Stock Exchange index (PSEi) advanced 73.58 points or 1.2% to close Friday’s session at 6,191.84.

However, the PSEi was lower by 1.95% on a weekly basis as it ended three out of five trading days in red territory.

Value turnover went down 29% to an average of P6.67 billion and net foreign selling rose 13% to an average of P1.15 billion.

“Trading volumes declined…as buyers moved to the sidelines and have let sellers take control of the market,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note.

“(The market) traded lower for most of the week as news of an outbreak in Cebu City, which is considered the country’s ‘second-largest city,’ has dampened the sentiment and has raised concerns of a second round of quarantine restrictions,” he added.

The situation has led the government to put Cebu under strict quarantine measures again, which worried investors of a repeat of the lockdown imposed in March should the situation in the rest of the country worsen.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said these worries may still be the main driving force of the market this week.

“Bearish sentiment is seen to be building up as the local market posted two straight weeks of decline, shedding 4.39% in the process. This trend may continue next week as COVID-19 risks weigh on economic recovery hopes,” he said via text.

“(The rising number of cases) points to a possible extension of our social restrictions which will keep our economy from operating at full capacity. A reversion to stricter forms may even be possible, which if done, would aggravate the economy’s losses,” Mr. Tantiangco added.

But Mr. Mangun is more hopeful that the market will continue to post growth at the close of the month.

“The PSEi is currently up 6% for the month of June and with only two days of trading left, we could say that it will end on a positive note. This will mark three months of consecutive gains for the main index unless we see a flurry of selling throughout the week,” he said.

He, however, noted the market may keep slipping in the coming weeks with the anticipated release of second-quarter corporate earnings, which most are expecting to reflect huge declines.

“We continue to believe that the market will trade sideways with a negative bias over the next few weeks as investors weather a storm of weak earnings and negative growth figures for the second quarter,” Mr. Mangun said.

“We may see the market move lower at the beginning of [this] week as it tests support at 5,950 and then start to move higher towards the end of the week,” he added.

Mr. Tantiangco is putting support for the PSEi at 6,100 and resistance at 6,350. Mr. Mangun is projecting support within 6,160-5,950 and resistance within 6,350-6,800. — Denise A. Valdez

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