By Denise A. Valdez
PHILIPPINE SHARES may continue moving sideways this week as the novel coronavirus (nCoV) outbreak continues to scare investors into the sidelines.
The bellwether Philippine Stock Exchange index (PSEi) dropped 2.59% or 191.89 points to close at 7,200.79 on Friday. This translates to a 5.54% decline for the main index on a weekly basis.
“Funds sought safety, as headlines related to the novel coronavirus outbreak in more than 20 countries stymied global sentiment. The PSEi fell…, highlighted by a deep Friday sell-off, after DoH (Department of Health) reported the country’s first confirmed nCoV case,” online brokerage 2Tradeasia.com said in a market note.
Value turnover last week dropped 18% to an average of P5.49 billion, while foreign investors sold an average of P608.37 million from the prior week’s P330.83 million.
“Health outbreaks, such as that of the novel coronavirus, neither have timelines nor definite endgames — and markets would have to deal with this uncertainty for now,” 2Tradeasia.com said.
The Philippines reported its first death of a person with the novel coronavirus yesterday, the first casualty on record outside mainland China. The victim was a 44-year-old Chinese man from Wuhan who arrived in the country on Jan. 21. He was the companion of the 38-year-old woman that the Health department reported last week as the first case of coronavirus in the country.
Deaths in China due to the virus have soared to 304 with 14,380 confirmed cases as of end-Saturday, Reuters reported yesterday. More than 130 cases of persons with the virus have also been reported across more than 20 countries.
While the virus is often likened to the Severe Acute Respiratory Syndrome or SARS and Middle East Respiratory Syndrome or MERS outbreaks in 2003 and 2012, respectively, which “did little to spook the PSEi,” 2Tradeasia.com said it must be noted that the novel coronavirus has a faster mode of transmission due to a “more globalized 2020,” and its impact may be greater because of the “present global supply chain’s increased dependency on Chinese capital and labor.”
“Brace for further volatility from hereon, as markets digest developments on the nCoV side and its accompanying economic repercussions,” it said.
As questions on the virus outbreak pile up and with fears yet to subside, 2Tradeasia.com said the market could only hope for a positive inflation report from the government on Feb. 5 and the central bank’s policy decision on Feb. 6 to drive up activity from investors.
“Note that the central bank previously hinted trimming at least 50 bps (basis points) for 2020, 25 bps of which may come by (first quarter 2020). Any supportive move may inject zeal, in tandem with earnings announcements from sector giants Bank of the Philippine Islands and Globe Telecom, Inc.,” it said.
“Immediate support is 7,000, secondary at 6,900, resistance 7,300-7,400,” it added.