Shares may drop further amid weak sentiment
PHILIPPINE SHARES may remain on a downtrend this week as investors stay cautious while awaiting clarity on the policy direction of the Trump administration and following weak domestic data.
On Friday, the Philippine Stock Exchange index (PSEi) sank by 0.53% or 37.26 points to end at 6,977.18, while the broader all shares index declined by 0.2% or 7.84 points to close 3,883.80.
Friday’s close was the PSEi’s worst finish in nearly two months or since it ended at 6,944.88 on Sept. 11.
Week on week, the benchmark index dropped by 2.3% or 165.78 points from its 7,142.96 finish on Oct. 31, posting a third consecutive week of losses.
“Local equities tracked regional counterparts’ rout [last] week after Donald J. Trump’s election victory spooked growth outlook outside of the United States,” online brokerage firm 2TradeAsia.com said in a market note.
“The local market continues to exhibit bearish movements, this time breaking below the 7,000 support line. Foreign funds have been exiting the market,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
For this week, the US election result could continue to affect market sentiment, he said.
“We may see some bargain hunting in this week’s trading. A strong ascent is not expected yet, however, as investors may continue to deal with our slow third quarter economic growth, weak peso, and the challenging global economic outlook due to the possibility of protectionist policies in the US amid a Trump presidency,” Mr. Tantiangco said.
Philippine gross domestic product (GDP) grew by 5.2% in the third quarter, slower than the revised 6.4% expansion in the second quarter and the 6% print in the same period last year. This was below the 5.7% median forecast in a BusinessWorld poll of 12 analysts.
In the first nine months, GDP growth averaged 5.8%, below the government’s 6-7% annual target.
Still, the market could receive a boost from the release of corporate results and expectations of more interest rate cuts here and abroad, Mr. Tantiangco added.
“Robust third-quarter and first nine-month corporate results and hopes of a continuous monetary policy easing here in the Philippines amid permitting factors, namely the country’s controlled inflation situation, the growth slowdown, and the Federal Reserve’s own policy easing, may give the market a boost,” he said, adding that the PSEi could retest its 7,000 support this week.
For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the market’s immediate minor resistance is at 7,065-7,170.
“The underlying upward trend for four months already remains intact for as long as it remains above the immediate support at 6,710 to 6,880 levels,” he said.
2TradeAsia.com placed the PSEi’s immediate support at 6,800-6,850, primary resistance at 7,000, and secondary resistance at 7,200. — Revin Mikhael D. Ochave
