Shares expected to continue slump this week

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By Denise A. Valdez, Reporter

PHILIPPINE SHARES are expected to keep declining this week as concerns over the coronavirus disease 2019 (COVID-19) pandemic make a resurgence and amid worries over geopolitical events.

The benchmark Philippine Stock Exchange index (PSEi) ended Friday’s session in red territory, falling 33.38 points or 0.52% to 6,315.07.

On a weekly basis, the PSEi was down by 2.5%, ending three straight weeks of recording climbs.

Value turnover for the week grew 9% to an average of P9.34 billion, but foreign investors returned to selling with net outflows averaging P1.02 billion, a turnaround of the previous week’s average net foreign buying of P42.63 million.

Much of last week’s performance was driven by external factors such as worries on the second wave of COVID-19 cases in other countries, the US Federal Reserve’s bond-buying program, tension between Chinese and Indian forces at the Himalayan border and the rebalancing of the Financial Times Stock Exchange.

In the Philippines, one of the biggest drivers was the Asian Development Bank’s forecast that the Philippine economy may contract 3.8%, down from the 2% growth it initially forecasted, PNB Securities, Inc. President Manuel Antonio G. Lisbona said.

Another was the central bank’s announcement that remittances from overseas Filipino workers may drop 5% this year because of mounting job losses abroad.

For the coming week, Mr. Lisbona said most investors may still be on wait-and-see mode for developments on the local and foreign issues.

“Looking at the charts, the market looks poised to continue consolidating at current levels, with 6,130 as the first line of support,” he said.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan shared the same outlook. “Market will continue to consolidate with a downward bias on concerns that the COVID-19 virus may continue to slow down economic activities as it spreads to big economies,” he said.

In the Philippines, Mr. Pangan said what would drive sentiment is the continued rise in COVID-19 cases, which may prompt a return of strict quarantine measures, as was the case for Cebu City.

The Health Department reported 943 new COVID-19 cases on Saturday, raising the country’s total to 29,400. Of this, 20,600 are active cases, 7,650 are recoveries and 1,150 are deaths.

Mr. Pangan is setting resistance for the PSEi at 6,375 and major support at 6,200. If the 6,200 support is breached, the next line would be 5,815.

For Mr. Lisbona, the 50% Fibonacci retracement level is at 5,989, and 6,000 psychologically. If this is breached, he said it may prompt a fresh wave of selling.