Trading at the Philippine Stock Exchange is expected to remain volatile on growing fears of a global recession, analysts said over the weekend.
Investors are weighing in the likelihood of a recession, as such scenario could lead to a significant drop in the market, they said.
Philippine stocks could test the support level of 6,000, despite last Friday’s rebound, amid continued rise in inflation and interest rates, which could curtail the growth of the domestic economy.
The Bangko Sentral ng Pilipinas announced a 25-basis-point interest rate hike to calm the raging inflation. However, the market is anticipating more gradual rate hikes in the coming months as commodity and fuel prices remain high.
“The week’s close at 6,217 signals that the bears are still in control. With the break below the 6,300 level, the 6,000 level is still likely to be tested,” BDO Unibank Inc. chief investment strategist Jonathan Ravelas said.
The benchmark Philippine Stock Exchange index dropped 1.8 percent last week to close at 6,217, while the broader all-share index also declined by 1.7 percent.
Four sectoral indices ended in the red led by mining and oil which lost 6.24 percent, services which dropped by 4.9 percent, financial which dipped 3.5 percent and property which fell 3.3 percent. Industrial index ended the week flat, while holding firms rose 1.1 percent.
Foreign investors were net sellers by P1.9 billion last week, while the average daily value turnover dropped to P4.35 billion from previous week’s average of P7.8 billion.
Top gainers last week were Emperador Inc. which climbed 10 percent to P19.70, Aboitiz Equity Ventures which advanced 5.8 percent to P51.50 and Jollibee Food Corp. which went up 4.2 percent to P200.
Heavy price losers included Atlas Consolidated Mining and Development Corp. which fell 18 percent to P4.60, PLDT Inc. which retreated 8.8 percent to P1,700 and Converge Information and Communications Technology Solutions Inc. which dropped 8.2 percent to P18.50.
Meanwhile, the PSE will start floorless trading this week, after closing of its trading floor on June 24.
The exchange opened its unified trading floor in February 2018 when it moved its headquarters to PSE Tower in Taguig City. Prior to this, the PSE maintained two trading floors―one in Makati City and another in Pasig City.
PSE president and chief executive Ramon Monzon said that when the exchange moved to PSE Tower, only 85 of 132 active trading participants availed of booths and dealer room spaces.
“With the COVID-19 pandemic, these 80 plus TPs experienced offsite trading firsthand when we had to go floorless due to the lockdowns. This clearly demonstrated to the TPs that seamless trading can be done so long as they are connected to the PSE’s trading platform. Finally, when the time came to renew their leases at the trading floor, only 29 of the 85 TPs renewed their leases, making it more practical for everyone to go on a full floorless trading,” he said.
“The use of this trading floor may have been short-lived, but we will repurpose this 695-square-meter space to more productive use for our stakeholders,” Monzon said.