LOCAL SHARES may decline this week as investors are expected to err on the side of caution with the expected extension of the Luzon-wide lockdown due to the lingering coronavirus disease 2019 (COVID-19) outbreak.

The benchmark Philippine Stock Exchange index (PSEi) picked up 4.66 points or 0.09% to 5,346.97 on Friday. It also posted a 1.53% climb on a weekly basis, marking the second straight week the main index closed with a gain.

Value turnover dropped 23% to an average of P5.35 billion week on week. Net foreign selling was trimmed 9% to an average of P703.82 million.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said activity at the local bourse last week was mainly driven by opportunistic investors looking for attractive prices.

He noted, however, that gains last week were smaller than the prior week’s 10.21% climb. “This shows that the bargain hunting has already been tempered, selling pressures are already creeping up as worries over the COVID-19’s economic impact weigh on investors’ sentiment,” Mr. Tantiangco said in a text message.

Luzon has been put under enhanced community quarantine for a month until April 13. But the government is now considering extending the lockdown as the number of COVID-19 cases continue to rise, both locally and abroad.

As of Saturday, the Department of Health reported 3,094 COVID-19 cases in the Philippines, while 144 have died and 57 have recovered. Globally, confirmed cases stood at more than 1.2 million and deaths at more than 64,700 as of Sunday afternoon.

“As local coronavirus cases continue to mount, concerns over a possible extension of the mainland Luzon enhanced community quarantine are likely to weigh on the market,” Mr. Tantiangco said.

“Investors will also continue to assess the pandemic’s adverse effect on the global economy primarily on our country’s top trade and investment partners with the latest evidence available such as the rise in US jobless claims and the contraction of manufacturing activities around the world,” he added.

US reported last week it lost 701,000 jobs in March, putting an end to 113 months of boom and fanning worries of a recession.

Mr. Tantiangco warned if there will be no positive drivers this week to counter COVID-19 worries, selling pressure is expected to dominate the market, which may lead to a breach of the 5,300 support level.

But the trading break on Thursday and Friday in observance of Holy Week may be a driver of the local bourse, online brokerage 2TradeAsia.com said.

“With the global environment on a standstill, this would be a good time to reflect on investment strategies. Long-term positioning is a must if one were to ride on a V-shaped recovery, once emotions tied to COVID-19 ebbs,” it said in a market note.

2TradeAsia.com is putting immediate support for the market at 5,000 and resistance at 5,500. Mr. Tantiangco is putting the next support at 4,850 and current resistance at 5,700. — Denise A. Valdez

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