LOCAL SHARES are seen to keep declining this week as investors anticipate lower corporate earnings and monitor rising coronavirus disease 2019 (COVID-19) cases.

The benchmark Philippine Stock Exchange index (PSEi) closed Friday’s session at 6,088.75, down by 58.91 points or 0.95% from the previous day.

On a weekly basis, the main index was lower by 108.63 points or 1.75%, recording its second consecutive week of decline.

Value turnover last week fell 22% to an average of P5.12 billion, while net foreign selling was trimmed 34% to an average of P745.04 million.

“The local bourse lost steam, with lethargic tirades for most of the week, following ABS-CBN Corp.’ franchise revocation, and in anticipation of sharp weakness in second quarter earnings,” online brokerage 2TradeAsia.com said in a market note.

Shares in ABS-CBN have suspended trading since July 10, when Congress denied the renewal of its franchise, which resulted in its inability to operate several business segments. The company has since started laying off employees to stay afloat.

This worried investors that other companies whose operations are heavily regulated may encounter similar problems with the government.

Aside from the ABS-CBN issue, another factor that weakened the market last week was anticipation for second-quarter corporate earnings, which companies and investors project as the worst performing quarter due to the COVID-19 pandemic.

2TradeAsia.com said this sentiment will continue influencing the market’s performance this week, as more corporations are expected to make announcements in the coming days.

“A descending triangle formation has been noted in our last note — this remains the case, warranting extra prudence in trades, in the face of a potential break from the critical 6,000 zone,” it said.

It also said investors will keep watch of the COVID-19 tally both locally and abroad, which have been expanding nonstop. Local COVID-19 cases stood at 65,304 as of Saturday, and global cases stood at 14.23 million as of Sunday.

Philstocks Financial, Inc. Research Associate Claire T. Alviar noted if the rise in COVID-19 cases in Metro Manila continues, this would fan worries that quarantine measures would be heightened again.

“If this happened, negative sentiment would spillover, and may lead to sell-off, as this will be detrimental to the economy, especially that we are still recovering from the strict lockdown during the first and second quarter,” she said in a text message.

“Some investors were also priced-in recovery in the third quarter, so if Metro Manila returns to more stringent measures, they may sell some shares which could weigh on the bourse,” she added.

2TradeAsia.com is putting initial support for the market at 6,000 and secondary support at 5,500, with resistance at 6,400. Ms. Alviar anticipates the PSEi to test the psychological support at the 6,000 level. — Denise A. Valdez

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