LOCAL SHARES may move sideways this week as investors digest talks between the United States and China and watch out for announcements on an extension or lifting of the enhanced community quarantine (ECQ) in Metro Manila.

The benchmark Philippine Stock Exchange index (PSEi) closed Friday’s session down 31.22 points or 0.55% to 5,621.94. On a weekly basis, it slid 1.38% to end two straight weeks of uptrend.

Value turnover improved 14.4% to an average of P5.66 billion. Foreign investors remained net sellers at the local bourse, but outflows were trimmed 26.4% to P493.07 million.

Online brokerage 2TradeAsia.com described last week’s trading activity as “mixed and narrow,” noting sentiment was focused on coronavirus disease 2019 (COVID-19) statistics and the timeline of reopening of economies.

This week, it said investors’ attention would be on the possible lifting or extension of the ECQ after May 15, as this would indicate the chances of resumption of local businesses.

“Uncertainties could resurface depending on approaches that will be taken by city mayors, specifically whether they would uphold May 15’s ECQ extension deadline, or further extend this to June 15,” 2TradeAsia.com said in a market note.

“Any motion to get things restarted on GCQ (general community quarantine) basis by May 15 would be lauded. Otherwise, negative undertone should be seen in case NCR (the National Capital Region) lags behind similar reopening plans from regional peers,” it added.

For Diversified Securities, Inc. Equity Trader Aniceto K. Pangan, the local market has a chance to go up this week to follow the movement of US markets last Friday.

“The local market may try to break the 5,750 level as US Market moved up at last trading session…on renewed investors optimism after US-China had an amicable trade talk last week…,” he said in a text message.

Reuters reported US President Donald Trump was “very torn” on ending the first phase of the US’ trade deal with China following tensions over the COVID-19 pandemic.

Despite possible investor optimism due to this, Mr. Pangan said investors may remain cautious as they assess further economic impact of the pandemic. The Philippines’ gross domestic product in the first quarter contracted 0.2% despite only accounting for two weeks of ECQ.

2TradeAsia.com said investors will also start to factor in the capital expenditure adjustments of listed firms in their portfolio building.

“Braving the investing environment against the backdrop of COVID-19 takes a lot of patience and deep sense of courage. Overall however, listed companies are further flexing their micro approaches, as changes in the macro setting evolve,” it said. “Include in portfolio selection stocks with solid operating cash flows and prime assets.”

The brokerage is putting immediate support for the PSEi at 5,500 and resistance at 5,750. — Denise A. Valdez

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