Market to remain volatile

MANILA, Philippines — The stock market may still see some volatility this week because of continuing tug of war between the optimists and pessimists after the market reached new highs and as global uncertainties continue.

Market investors are still debating on whether or not there is still room for the market to climb, whether the recent highs are sustainable or whether the index would retreat to the old ways.

“The tug-of-war between optimists and pessimists has begun, with varying calls on whether the equities market still has room for upside. “Bears” argue on heady valuation, and that geopolitical tensions could readily tilt the case in their favor,” 2TradeAsia.com said in a report. “Optimists (or ‘ber’ players) see more room to partake on the ‘ber’-month spending, believing borrowing costs are still benign and could readily provide the boost in share prices, based on earnings plus-side,” it said.

Either way, this sentiment spells volatility in equities, which could provide capital gains opportunities for those who do their homework diligently, 2TradeAsia.com said.

Last week, the stock market ended in the red after US Federal Reserve chief Janet Yellen cautioned the Fed in “moving too slowly” on interest rates. 

Adding to jitters is another move from North Korea, which also threatened to test its hydrogen bomb in the Pacific Ocean, prompting some fund managers to move toward safer havens. 

As a result, the PSEi retreated 110 points weak-on-weak to settle at 8,171 led by property (down 2.6 percent) and industrials (down two percent).  Market breadth was also weak, 87 to 123, even as turnover improved to P8.745 billion on average.

Against this backdrop, net foreign buying was sustained, jumping to P5.2 billion from P121 million previously.

According to 2TradeAsia.com, the PSEi’s move below 8,200 may have sent jitters to market investors who decided to stay away from the market. These are the more risk-averse investors.

On the other hand, the more adventure players have decided to stay especially those willing to ride the Philippine’s growth prospects.  

“We view this ‘blip’ as temporary, possibly to shake off newbies against seasoned experts.  Whipsaws are part of equities investing, and these occurrences present buying windows for those who are brave enough to partake on the country’s fundamental merits with a more calculated view on risks,” 2TradeAsia.com said.