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Stocks may drop on negative market sentiment

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PSE
The Philippine Stock Exchange — PHOTO BY SANTIAGO J. ARNAIZ

By Denise A. Valdez
Reporter

PHILIPPINE STOCKS are seen to trade lower this week amid negative sentiment caused by developments in the global scene.

The Philippine Stock Exchange index ended flat on Friday with a 5.7-point or 0.07% uptick to 7,824.59. The all shares index inched up 8.28 points or 0.17% to 4,679.04 at the close of last week’s trading.

On a weekly basis, the main index declined 1.65% to 7,824.59 mainly due to the hazy progress of the trade talks between United States and China. This is the second straight week the PSEi recorded a loss.

Value turnover last week climbed to P25.87 billion from P25.77 billion a week ago. Net foreign selling for the week increased to P3.22 billion from P2.43 billion previously.

Last week, Reuters reported that trade experts are flagging the unlikelihood of signing the “phase one” US-China trade deal within the year. US President Donald Trump himself said he finds China is not meeting his expectations in the trade talks.

“This market will not rally until we see a pick up in trading volumes and until investors start to look at economic and corporate fundamentals,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note sent over the weekend.

“Investors continue to focus on the sentiment which has been very grim due to external factors abroad and the uncertainty on the direction of our own economy since last year. Several companies are at multi-year lows which could encourage bargain hunters to start loading up and position themselves for the longer term,” he added.

Mr. Mangun said the Philippine market has been moving sideways all year long and investor optimism is “slowly fading away due to a lack of conviction that the market can go higher.”

“We may see it continue lower and test stronger support levels at the 7,500 area in the coming weeks,” he said.

Online brokerage 2Tradeasia agreed with Mr. Mangun’s thoughts on bargain hunting in the upcoming week.

“Several large caps have breached fresh lows during the week, and most are already trading oversold zones. With seasonal liquidity this December, it would be worth to consider shopping for bargain stocks,” it said.

“While equities may be in competition with the roster of bond issuances from both government and private sectors, not all will be awarded the fixed income float. As such, free cash should find its way into equities than stay idle,” it added.

However, it said foreign investors may remain bearish on the local market, noting the Thanksgiving holiday in US on Nov. 28 and the MSCI rebalancing. The Southeast Asian Games in the Philippines may also sidetrack investors this week.

“Within such lull, it would be good to gradually position on prime stocks ahead of an expected rebound. Immediate support is 7,700, resistance 7,900-7,950,” 2Tradeasia said.





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