MANILA, Philippines - The local stock market will likely be stuck in a sideways trading range as investors remain on edge following Germany’s rejection of proposals that would bolster the strength of the eurozone’s bailout fund.
The Philippine Stock Exchange index closed at 4,292.50, down 0.03 percent week-on-week, with most of the sub indices in the red led by the mining and oil sectors which fell 1.3 percent on weak metal prices.
However, the financial sub-index gained 1.42 percent, buoyed by a Fitch report saying Philippine banks are well capitalized and remain liquid.
AB Capital Securities Inc.’s Gregg Adrian R. Ilag said the market will continue to track movements overseas.
“There are a few important economic data due to be released this week, which means most equity markets will react more on news over Europe. The European Summit may not deliver positive results. The leaders are divided over what strategy should be used to tackle the crisis,” Ilag said.
Germany rejected some measures in draft conclusions from the summit including giving the European Stability Mechanism a banking license and issuing common eurozone debt. This triggered a steep sell-off in US stocks.
This development doused cold water on expectations policy makers will be able to agree on a credible plan to solve the European debt crisis.
With no end in sight to the eurozone’s debt problem, AB Capital Securities has advised investors to lighten up their positions on stocks which have exposures abroad.
“Financials and export-related stocks would be least favorable in the current situation. Issues that have more domestic exposure such as retail stocks are better choice of investments for the time being,” Ilag said.