By Denise A. Valdez
THE MAIN INDEX is seen to keep moving with uncertainty this week due to the coronavirus disease 2019 (COVID-19) outbreak, but a possible catalyst will be the release of earnings of index heavyweights.
Despite seeing three consecutive days of increase last week, the 30-member Philippine Stock Exchange index (PSEi) slumped 114.39 points or 1.66% on Friday to close at 6,770.38.
This is equivalent to a 0.26% reduction on a week-on-week basis and was the second straight week the PSEi posted a decline.
Value turnover decreased 16% to an average of P6.5 billion. Offshore investors remained sellers, but net foreign selling was trimmed to P500 million from P2.5 billion the week prior.
“Persistent coronavirus fears continued to pall sentiment, as funds assess the fallout to the global economy, even as the widely-followed Fed rate was trimmed by 50 basis points,” online brokerage 2TradeAsia.com said in a market note.
The US Federal Reserve announced an emergency rate cut last week to help cushion the economic impact of COVID-19. This resulted to a rally at Wall Street, which affected other global equities, including the PSEi.
However, the main index retreated on Friday as the Department of Health (DoH) announced two new cases of COVID-19 infections in the Philippines — one of which has no record of overseas travel.
Over the weekend, the DoH said this case is the first case of local transmission of the virus. It also announced the country’s sixth case of COVID-19: the wife of the fifth patient.
“Anxiety is thus not unwarranted at this point, but consideration should be put on whether fundamentals have weakened to irreversibility,” 2TradeAsia.com said.
It added four PSEi members are set to announce their 2019 earnings this week, which may help influence investor sentiment, aside from COVID-19 news. These are Ayala Corp.; San Miguel Corp.; Aboitiz Equity Ventures, Inc.; and Aboitiz Power Corp.
“So far, 16/30 blue chips (66.5% PSEi weight) have fared well (weighted average EPS growth of 12% for 2019), albeit citing cloudy 2020 operating environment, courtesy of COVID-19,” the brokerage said. EPS, or earnings per share, is the measure of earnings per outstanding share of a company’s stock.
2TradeAsia.com is also expecting the central bank’s Monetary Board meeting on March 19 to result to new measures that will help the market following the Fed’s move.
“The (Bangko Sentral ng Pilipinas) may likely hop in on the easing bandwagon, with more wood to burn for the winter, at least in terms of monetary armament relative to counterparts,” it added.
For the immediate week, the brokerage is putting immediate support for the PSEi at 6,500-6,600 and resistance at 6,850-6,950. “Accumulate gradually on lows, particularly stocks with attractive yields, to hedge holdings amid the rout,” it said.