By Denise A. Valdez, Reporter
THE country’s ability to keep the number of coronavirus disease 2019 (COVID-19) cases low despite a relaxed lockdown will determine the movement of the market this week.
The benchmark Philippine Stock Exchange index (PSEi) soared on Friday to 5,838.84, up by 268.62 points or 4.82% from the previous day’s close.
After ending the week in green territory for three out of four trading days, the PSEi rose 5.4% on a weekly basis.
The anticipation and the eventual confirmation of easing quarantine measures in Metro Manila boosted market confidence last week. Value turnover surged 121% to an average of P8.88 billion. Net foreign outflows went down 34% to an average of P227.71 million.
“Currently, the local market is enjoying the optimism stemming from the easing of restrictions here in the Philippines,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message on Sunday.
“Our major regions in terms of economic contribution are now allowed with more economic activities. The said optimism has even brought the market above its 5,700 resistance level,” he added.
As President Rodrigo R. Duterte relaxed the lockdown in Metro Manila starting June 1, industries and government offices are set to resume work. This is expected to kick off the economy’s recovery after a lockdown of over two months, which resulted in a 0.2% gross domestic product (GDP) contraction in the first quarter.
However, several sectors are wary about the decision as local COVID-19 cases continue to rise. The Health department said there were 17,224 COVID-19 cases in the Philippines as of Saturday, of which 12,466 are active and the rest have either recovered or died.
Mr. Tantiangco said sustaining investor optimism would depend on local developments regarding the spread of the virus.
“(This) week, the number of new coronavirus cases here in the country would be monitored to see if the downgrading of restrictions has brought an unwanted consequence namely, a further spread of the virus. If so, the local market could fall below the 5,700 level again,” he said.
Online brokerage 2TradeAsia.com said the market may still rise as investors hold on to hopes of economic recovery.
“Having run above 5,700 on good volume last Friday, eyes are set on the PSEi’s ability to move towards 6,000-6,500. Note overall that volatility remains in place, as sentiment remains hyped-up with several countries’ gradual transition in reviving business activity,” it said in a market note.
2TradeAsia.com said it is important for companies now to emphasize how they plan to boost revenue streams, such as by incorporating an e-commerce model.
2TradeAsia.com is putting immediate support within 5,700-5,750 and resistance within 5,900-6,000. Mr. Tantiango of Philstocks is setting the trading range from 5,700 to 6,100.