PHILIPPINE shares will continue to be volatile this week amid the pilot implementation of granular lockdowns in Metro Manila and increasing coronavirus disease 2019 (COVID-19) cases.

The Philippine Stock Exchange index (PSEi) declined by 55.58 points or 0.79% on Friday to close at 6,912.85, while the broader all shares index lost 27.69 points or 0.64% to 4,295.84.

Week on week, the benchmark index dropped 57.66 points from its 6,970.51 finish on Sept. 10.

“Weak sentiment prevailed over the market this week, as investors observed how the government will go about with enforcing the granular lockdowns to handle the COVID-19 situation in the coming weeks,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message on Saturday. 

“Internationally, participants stayed cautious as participants felt concerned over the weak retail sales report in China,” he added.

The National Capital Region (NCR) started implementing targeted lockdowns with alert level systems last week. The region will be under Alert Level 4 until the end of the month. It is the second-highest alert level as the infection rate in the region remains high.

The new system will allow local government officials to impose lockdown restrictions in targeted areas even without warning as opposed to implementing region-wide restrictions to help spur economic activity. If the system proves to be effective, it will be implemented throughout the country. 

Meanwhile, in China, retail sales inched up by a mere 2.5% from the expected seven percent expected rate as an outbreak of the Delta variant of COVID-19 led to lockdown and travel restrictions amid the holiday season. 

For this week, analysts said investors will continue to monitor the implementation of granular lockdowns in Metro Manila.

“Market will continue to be volatile as the new localized restrictions or granular lockdown remains as a way to contain the spread of the virus in the NCR bubble plus region while LGU (local government units) sustains the vaccine rollout,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message on Saturday. 

“Also, OCTA [Research] observed the sustained downward reproduction number of infection rates to 1.22 from 1.39 the previous week,” he added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail on Friday said the upcoming budget deficit and balance of payment reports, as well as the Bangko Sentral ng Pilipinas’ monetary policy-setting meeting, are expected to affect market sentiment this week.

Timson Securities’ Mr. Pangan said he wants to see if the benchmark index can break past 7,000 this week, while Diversified Securities’ Mr. Pangan expects the market to trade between 6,800 to 7,100. — K.C.G. Valmonte