By Denise A. Valdez

LOCAL SHARES are seen to move in a stable range this week, with major catalysts being the release of corporate earnings and developments in the outbreak of the coronavirus disease 2019 (COVID-19).

The 30-member Philippine Stock Exchange index (PSEi) closed lower on Friday at 7,369.78, down 43.22 points or 0.58% from the previous session. But it was higher by 1.21% on a weekly basis, a reversal of the drop seen a week ago.

Value turnover also rose 1.4% to P6.13 billion despite foreign investors turning sellers with an average net selling of P250 million last week from a net buying of P163 million the week prior.

“Markets found comfort in Beijing’s message over the week, which communicated that virus control efforts ‘are working.’ Thus, coming from a deep selloff (the previous week), the bellwether index made an 87-point jump to close the week at 7,369,” online brokerage said in a market note.

This week, the scheduled release of full year 2019 earnings of some listed firms is seen to be a major driver of the market.

“We’re expecting the market to move sideways within 7,200 and 7,500 range as COVID-19 worries linger in the market… (On) a positive note, anticipation of FY2019 corporate earnings result may lift sentiment along with the month-end window dressing,” Philstocks Financial, Inc. Research Associate Claire T. Alviar said via text. pointed to the same catalyst, noting that those scheduled to release their earnings this week comprise 25% of the PSEi basket — Manila Electric Co.; Metro Pacific Investments Corp.; BDO Unibank, Inc.; and SM Investments Corp.

“So far, average 2019 EPS (earnings per share) growth for companies that have reported as of Feb. 21 (six firms, 32% of PSEi basket) is at 14.7%. With participants in ‘earnings mode’, corporates will likely have to clarify growth expectations, especially in the context of COVID-19 and Taal eruption impact, among others,“ it said. It noted that its weighted average EPS growth estimate for 2020 is 10%.

“As the macro picture awaits more cogent policies to counter COVID-19’s economic impact, corporate watches will continue to heed for capex (capital expenditure) and earnings feelers for 2020, and from there weigh whether ‘hope springs eternal’ amid the noise,” said.

Philstocks Financial’s Ms. Alviar said the market may record weaker volume this week due to the shortened trading due to Tuesday’s holiday. But said it may eventually increase later in the week.

“Volume scenario in the coming week may be characterized by a crescendo, with a holiday early in the week possibly thinning out turnover, before later finding momentum on funds’ window dressing,” it said. “As such, brace for volatility, as the index finds composure near the next hurdle at 7,500.”

The brokerage put immediate support at 7,200-7,300 and resistance at 7,400-7,500.