PHILIPPINE SHARES are expected to maintain their downtrend this week with the massive increase in local coronavirus disease 2019 (COVID-19) cases every day.

The benchmark Philippine Stock Exchange index (PSEi) closed flat on Friday with a 4.8-point or 0.07% improvement to 6,197.38. On a weekly basis, the index was down 2.75%.

Value turnover for the week was also down by 22.8% to an average of P6.55 billion. Foreign investors became net sellers, with outflows reaching an average of P1.14 billion from an average net foreign buying of P1.08 billion the prior week.

Online brokerage attributed the weak performance of the market to dampened investor sentiment, which it said was due to “higher coronavirus infections and the signing of Anti-Terrorism Bill into law.”

The Department of Health has been reporting thousands of new COVID-19 cases every day since July 3, pushing the total tally to 54,222 as of Saturday, of which 38,813 are active cases.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said this weighed down on investor sentiment amid hopes that the Philippine economy is on its path to recovery. Investors are also worried another lockdown might be on the way if the local outbreak keeps worsening.

“The local market is seen to have a downward bias as local coronavirus cases climb at an intensified scale, in turn weighing on the economic recovery investors have earlier hoped for,” he said in a text message.

Mr. Tantiangco also said events in the past week that ended with ABS-CBN Corp. not being granted by Congress a new franchise is causing worries about the business climate in the Philippines.

“[T]he denial of ABS-CBN’s franchise renewal is seen to raise concerns over political risks which in turn could spill over to the rest of the market especially to the heavily regulated ones,” he said.

Another factor that might affect investor sentiment is the impending release of second-quarter corporate earnings, which are expected to be worse than results in the first quarter. said the weighted average earnings per share in the first quarter already fell by 24%, and it may contract by at least 30% in the second quarter, if not post negative results.

“[T]he story for second quarter reporting will have to dwell on cost-cutting methods, and assurances that the 2021/22 comeback will be worth investors’ stretched patience,” it said in a market note.

Lastly, Mr. Tantiangco said the tension between the United States and China continues to be a threat to the local market, especially after US President Donald Trump said the US-China relationship is “severely damaged” by the pandemic. is putting resistance for the market at 6,400 to 6,580 and support at 6,050.

Mr. Tantiangco sees the PSEi’s trading range from 6,100 to 6,350, with a possible testing of the former. — Denise A. Valdez