COVID-19 fears to pull down market further

MANILA, Philippines — The benchmark Philippine Stock Exchange index (PSEi) is seen to continue trading downwards, this week given the lingering uncertainties over the coronavirus disease 2019 (COVID-19) outbreak.

“Expect the same heartaches for the week. Investors are facing the same risks. Uncertainties on the impact of the virus to the global economy, concerns on international trade and regulatory risks hounding several locally listed companies will continue to dampen market sentiment,” said Astro del Castillo, managing director of First Grade Finance Inc.

Castillo said the PSEi would continue to consolidate at the current levels.

In a separate commentary, BDO Research said the week’s close at 7,282 means that bearish trades continue to dominate the trading space.

The next major support after 7,300 is at the 7,000 level.

Last week, the market barometer PSEi fell by three percent week-on-week as investor confidence remains infected by risk-off sentiments arising the potential economic fallout from the coronavirus.

The novel coronavirus continues to spread with the death toll now at 1,666.

The outbreak is also seen affecting the Philippine economy.

“I think the effect of the outbreak to our businesses will be felt most especially by those dealing with China such as the hotels, tourism and transportation sectors.  All of these mentioned sector will be affected and as of this date we cannot quantify the damage with absolute certainty on how this will affect the GDP in numbers, but we do know that this will be felt for months and will not disappear overnight....The coronavirus scare will also affect business confidence and sentiment adding to the other risk the Philippine stock market is facing,” Piper Chaucer Tan of Philstocks Financials said.

Chris Mangun of AAA Securities said the market remains volatile as investors try to figure out how to position themselves with all the uncertainties and external headwinds.

Mangun said that after failing to break above the 7,475 resistance level in the last two weeks, the market may continue lower and lean against the 7,200 support level.