Stocks are likely to move sideways with a downward bias this week, as investors shun emerging markets such as the Philippines on increased possibility of a US Federal Reserve rate hike by yearend.
BDO chief market strategist Jonathan Ravelas said last week’s close below the 7,500-point level for the first time since May 27 implied that there was still room for further weakness toward the 7,000 to 7,200 levels.
Ravelas, however, said the market’s rebound towards the end of the trading week to close at 7,389.30 hinted that the week’s low of 7,312.18 registered a year earlier could be the near-term bottom.
“Look for a move above the 7,500 to confirm said bottom,” Ravelas said.
Luis Limlingan, managing director of Regina Capital Development Corp., said the index was still generally on a downtrend and that investors should expect heavy selling pressure.
“This leads us to take a very cautious approach in trading this week by picking only issues that are showing signs of stability both in price and technical signals,” Limlingan said.
On the domestic front, investors will be looking forward to President Rodrigo Duterte’s state visit to China if this would translate into increased investments and business opportunities for the country.
The Philippine Stock Exchange index, the 30-company benchmark, fell 2.5 percent over last week’s five-day market trading to close at 7,389.30 on Oct. 14, while the broader all-share index slipped 2.3 percent to 4,402.69 amid continued outflow of foreign funds.
Despite the loss, the bellwether was still up 6.3 percent this year.
Except for the mining and oil index which rose 0.4 percent, the other five sectors ended in the red led by property which declined 4.3 percent, holding firms which dropped 2.6 percent and industrial sector which went down by 2.3 percent.
Foreign investors were net sellers last week by P2.8 billion.
Top gainers last week were PhilWeb Corp. which jumped 18.3 percent to P9.10, Bloomberry Resorts Corp. which advanced 13.7 percent to P5.15 and Semirara Mining and Power Corp. which climbed 1.8 percent to P122.70.
Heavy losers were Xurpas Inc. which declined 15.6 percent to P12.22, Megaworld Corp. which lost 8 percent to P4.14 and Megawide Construction Corp. which fell 7.7 percent to P14.48.