Foreign selling will likely continue to drag down the local stock market this week ahead of the December US Federal Reserve meeting, according to analysts.
Analysts said the positive November US jobs data could convince the Fed that the US labor market was healthy enough to absorb another round of rate hike this month.
A rate increase in the US would draw foreign funds away from emerging markets such as the Philippines and into dollar-denominated assets.
Data released by the US Labor Department showed the world’s largest economy added 178,000 jobs in November and the unemployment rate fell sharply to 4.6 percent, the lowest rate since August 2007.
“The market might find itself under further selling pressure as investors stay away ahead of the US Fed policy meeting to be held from Dec. 13 to 14. In our view, a breakdown below 6,800 on a surge in volume could signal further downside towards 6,084,” RCBC Securities analyst Jeremy Yumul said.
“From this year’s high of 8,102 on July 21, a bear market, technically defined as a 20-percent drop from the peak, would be established at the 6,480 level,” Yumul said.
The Philippine Stock Exchange index, the 30-company benchmark closed flat last week at 6,886.74, while the all-share index declined 0.2 percent to 4,166.49, amid an unexpected deal reached by the Organization of Petroleum Exporting Countries to cut production.
Except for the financial and industrial indices which went up 1.1 percent and 0.1 percent, all other sectoral indices ended in the red, led by services which fell 1.2 percent and mining and oil which retreated 1.1 percent.
Foreign investors were net sellers last week by P1.72 billion, as total foreign selling reached P22.9 billion while foreign buying amounted to P21.2 billion.
Top gainers last week were Petron Corp. which climbed 10 percent to P10.12, DMCI Holdings Inc. which rose 5.2 percent to P13.40 and gaming company Travellers International Hotel Group Inc. which advanced 5.1 percent to P3.30.
Heavy losers were DoubleDragon Properties Corp. which declined17.2 percent to P40.45, Cebu Air Inc. which went down 5.3 percent to P97.80 and LT Group Inc. which dipped 5.2 percent to P12.94.