Index may weaken further this week

MANILA, Philippines — The benchmark Philippine Stock Exchange index is seen to continue trading downward this week amid fears over the rapid spread of the coronavirus disease 2019 (COVID-19).

“The scenario is one of increased volatility with a downward bias,” said First Metro Investment Corp. head of research Cristina Ulang.

Last week, market barometer Philippine Stock Exchange index fell by 7.90 percent week-on-week to 6,787.91 as concerns about the coronavirus’s effect intensified.

“Investor’ confidence was severely infected by fear causing them to sell their riskier assets, in this case equities,” said BDO Research in a separate commentary.

Thus, it said last week’s close at 6,787.91 highlights that the bearish momentum remains.

“We continue to see the market to trade sideways to down. Support lies at the 6,700 levels,” it said.

Chris Mangun of AAA Securities said that the general sentiment has gone from fear to panic as investors forego any profits and go back into cash.

“Investors are now considering the worst-case scenario that billions may be infected in the coming months by this radical disease. Bears are completely in control of this market and the only question is how low it can go,” he said.

“From a technical standpoint, we are seeing a death cross on the monthly chart. The eight-month moving average line has crossed below the 50-month moving average hence the death cross. This is something that we have not seen since the beginning of this bull run back in 2009. It also ended the month right on its 100-month moving average, something that we haven’t seen since 2009 as well. This may be the signal that the end is near for this bull run. We may see the market lose another 1,000 points or more if we ever see an outbreak on our shores,” Mangun said.

Even if we see some gains (this) week or the week after, this will not be enough to negate the current trend,” Mangun said.

In all, he said investors have completely lost confidence in the market, as seen in current prices.

FMIC’s Ulang said that any technical rebound would only be temporary at this point until there is a clearer direction as to how the virus would be contained.