Market seen trading lower this week

MANILA, Philippines — The Philippine stock market is seen trading lower anew this week as the bearish sentiment is likely to prevail, traders said.

Ed Francisco, president of BDO Capital & Investment Corp. said the market may continue trading sideways.

“There are no major catalysts expected so the market will just move sideways,” Francisco said.

For the specific stocks, the movement would depend on their 2019 corporate earnings results.

BDO Research, meanwhile, said the week’s close at 7,369.78 highlights consolidation between 7,300 and 7,500 as bear trades continue to dominate the trading space.

“The major support lies at 7,300 levels,” it said.

Last week, the market barometer PSEi rose by 1.21 percent week-on-week to 7,369.78 on bargain-hunting activities as investors took positions ahead of the fourth quarter earnings results.

The PSEi was weaker last Friday amid increased global risk aversion amid concerns that the novel coronavirus could spread in other countries outside China and could lead to slower global economic growth, said Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp.

He said the PSEi was also weaker after the latest decline in vehicle sales data, balance of payments deficit data and the net foreign portfolio investments data which saw the biggest net foreign selling since May 2019.

“Net foreign portfolio investment in January 2020 was -$486.1 million, the biggest net foreign selling in eight months versus -$321 million in December 2019 and versus $762.8 million a year ago,” Ricafort said.

The BOP, meanwhile, posted a deficit of $1.355 billion, the biggest deficit in more than a year or since September 2018.

“For next week, developments related to the novel coronavirus would still be the major catalyst for the global and Asian financial markets, including the PSEi, especially concerns that it could spread outside China and some adverse effects on the global economy and on the sales, net income, and valuation of some global/multinational companies, as well as some affected listed companies, that experience some disruptions in operations and in global supply chains,” Ricafort said.

He sees the next support for the PSEi at the 7,000 to 7,200 range which prevents any further downside potential and maintain the underlying upward correction over the past week.