Index may weaken this week

MANILA, Philippines — The Philippine Stock Exchange composite index is expected to hover at 5,250 and 5,700 level this week, according to Piper Chaucer Tan of Philstocks Financials. 

This is because last week’s rallies may not be sustained given the continued concerns over the coronavirus disease 2019 or COVID-19 outbreak.

He said there may be a spike in trading activity due to developments in overseas markets, particularly on how they address the outbreak.

“How countries and governments handle the situation could spark the trading once it goes back operational on Monday,” Tan said.

“FOMC minutes coming from the US Federal Reserve could give us a hint whether they will implement a monetary stimulus and how this may provide liquidity to the market and also could provide how they will save the US economy from further economic fallout,” Tan said.

The market needs more foreign investor participation to move up.

Data showed that since March 16, the market has consistently seen net foreign selling which now amounts to P11.658 billion as of April 6. 

“This indicates that the short term rallies by the market may not be sustained and placing the initial support of the PSEi at 5,250 and 5,700 as initial resistance for this week,” Tan said.

Investors are keeping cash or staying liquid in this volatile market as shown in the weaker value turnover since the shortened trading due to the enhanced community quarantine. The market’s value turnover has been averaging P6.3 billion and Friday’s session only registered at P4.1 billion. 

“Investors do not want to be in long position as investors are risk averse given the concern on COVID-19,” Tan said.