Market may weaken this week

MANILA, Philippines — The stock market may trade with a negative bias this week on the back of US President Donald Trump’s imposition of new trade tariffs on $200 billion worth of Chinese goods.

“Our view for the market is that it will have a negative bias because of the imposition of trade tariffs of US to China and MSCI rebalancing on May 15. MSCI may reduce the weight of the Philippines despite the BBB+ credit rating awarded to the country just recently,” said Piper Chaucer Tan of Philstocks Financials.

He said the midterm elections today won’t have much effect too.

“The midterm election won’t have much effect on the equities market unlike the presidential election which is more significant and which is backed by optimism on a new administration,” he said.

Moving forward, Tan said there may be pockets of optimism given that the country’s economic growth is still the fastest in the region.

“Amongst ASEAN nations, we are still one of the fastest economies plus the inflation easing which gives room for the Bangko Sentral ng Pilipinas to reduce its interest rates,” Tan said.

The economy grew by 5.6 percent in the first quarter.

Investors may also look to corporate earnings for another possible positive catalyst for the markets to spur a rally again. “We think the PSEi may range from 7,650 to 8,000,” he said.

Last week, global equities markets ended in the red with markets in Asia taking a bigger hit.

This was primarily due to the increased tensions in the US-China trade war after President Donald Trump raised tariffs to 25 percent from the previous 10 percent on $200 billion worth of goods.

For the Philippine stock market, the main index ended the week down 2.83 percent.

Moving forward, Christopher Mangun of Eagle Equities said the market has a lot to despair because of the losses in the previous week.

Mangun, however, said the economy is expected to improve because of the pick-up in government spending which would jumpstart infrastructure projects that were set last year.