By Denise A. Valdez, Reporter
THE LOCAL MARKET may continue to be full of profit takers this week as the main index undergoes correction and investor optimism starts to wane.
The bellwether Philippine Stock Exchange index (PSEi) closed on Thursday at 6,476.24, higher by 36.87 points or 0.57% from a day ago. The market was closed on Friday in observance of Independence Day.
On a weekly basis, the PSEi is up 0.17% as investors “took a breather after consecutive days of rally,” online brokerage 2TradeAsia.com said.
Value turnover slipped 0.97% to an average of P8.55 billion, while net foreign buying was slashed 92.6% to an average of P42.63 million.
“(The PSEi) hovered around the 6,500 level all week but struggled to climb as investors have started to secure profits after several weeks of substantial gains… Majority of investors are still optimistic and are trying to make the most of this recent rally,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note.
He added last week’s performance shows the market rally over the past two weeks “has run out of momentum,” and therefore may “start to pull back and test a stronger support level.”
2TradeAsia.com said investors will be awaiting the next announcement from the government whether it will change the current quarantine status in Metro Manila and other major cities. The relaxed lockdown currently in place will expire after June 15, and it may be tightened, maintained or further relaxed after that.
“The (more relaxed lockdown), being the penultimate phase before the ‘new normal’, is the most ideal, at least from capital markets’ perspective,” it said. If the government goes this direction, 2TradeAsia.com said it would bode well for short-term cash flows of companies in the dining, accommodation, entertainment and sporting sectors.
For Mr. Mangun, the decline in global equities last week over the US Federal Reserve’s decision to maintain interest rates may also dampen sentiment in the local market this week. But he believes more money may go into the stock market as investors keep looking for profit.
“At the moment, economic fundamentals remain strong despite the setback caused by the pandemic. Our economy is still seen to perform better than most as it recovers from the damage caused by the lockdowns. Investors are still watching how well the government is handling the eradication of the virus as well as its relief response,” he said.
Both 2TradeAsia.com and Mr. Mangun said investors will have their eyes on MerryMart Consumer Corp. which will list its shares at the market today. The company is the first to do an initial public offering this year.
2TradeAsia.com is putting immediate support within 6,000-6,200 and resistance within 6,500-6,600. Mr. Mangun is setting support within 5,950-6,350 and resistance within 6,800-7,200.