Stocks seen rising as investors pick up bargains
By Denise A. Valdez, Reporter
PHILIPPINE SHARES are expected to perform better this week due to bargain hunters after weeks of market decline.
The bellwether Philippine Stock Exchange index (PSEi) ended Friday’s session down 25.75 points or 0.42% to 6,003.26. On a weekly basis, the PSEi fell 1.4% to record its third straight week of decline.
Value turnover last week dropped 25% to an average of P3.84 billion. But net foreign selling declined by 53.7% to an average of P344.71 million.
The rise in coronavirus disease 2019 (COVID-19) cases both locally and abroad was the main drag on market sentiment, online brokerage 2TradeAsia.com said.
COVID-19 cases in the Philippines reached 78,412 as of Saturday. Malacañang had previously warned quarantine rules may be tightened again if the tally hits 85,000 by end-July.
Across the world, the virus has sickened 16 million and killed 643,826 as of Sunday, based on data by Johns Hopkins University.
But for the coming week, the market may start recovering as several stock prices have fallen for three consecutive weeks, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said.
“Investors may find current valuations attractive as prices have moved back to levels seen at the beginning of June,” he said in a market note.
“Higher trading volumes will correlate with the market’s rise. We expect to (see) less movement at the beginning of the week but increase toward the end of the week,” Mr. Mangun added.
The State of the Nation Address of President Rodrigo R. Duterte on Monday will also drive market sentiment this week, as it is expected to shed light on several uncertainties regarding the recovery plan of the battered economy.
“Thus far, the investing community has been abreast with daily COVID-19 numbers, and the headlines continue to support expectations for tougher economic times ahead… Clearly, any recovery angle would be the inflection point to grease-up investment faucets, with global economies already reeling from COVID-19’s wrath,” 2TradeAsia.com said in a market note.
“A comprehensive plan on how the economy will recover and the stimulus the government can provide will be at the top of the list for investors,” Mr. Mangun added.
The AAA Equities research head noted that current estimates show the Philippine economy will contract by 15% by end-2020, which means it would shrink back to its size in 2016.
“The government will have to take some drastic measures to keep the economy from declining so much. Failure to address these concerns may draw a lack of confidence from investors,” Mr. Mangun said.
2TradeAsia.com is putting immediate support for the benchmark index within 5,800-5,900 and resistance within 6,100-6,200. Mr. Mangun is setting support within 5,950-6,040 and resistance within 6,400-6,600.
