Index may move sideways this week

MANILA, Philippines — The stock market is expected to move sideways this week as investors continue to stay on the sidelines waiting for answers on how the coronavirus pandemic will end.

“We go into next week expecting it to trade sideways as it has in the last four weeks, except now with a negative bias as investors have walked away from the market. The PSEi has resiliently stayed above the 5,350 support level since it broke above it back in April,” said Chris Mangun of AAA Securities.

Last week, the stock market ended flat on extremely low trading volume as most investors stayed on the sidelines, afraid to hold riskier assets because of the current environment.

“Thus, it ended the week with minor losses as the positive movement in equities abroad helped lighten the sentiment in local equities as well. It traded sideways with a slight negative bias, similar to the previous week’s trading as bears and bulls have found an equilibrium. We saw trading volumes decline even further with turnover value at P20.05 billion for the week. It shattered the previous week’s record of having the lowest trading value for a full week of trading. Foreign investors continue to dump local equities with P1.73 billion worth of net-selling,” Mangun said.

He said most of the upside momentum is gone and investors may take some more cash from the market.

For this week, there will only be four trading days because of the Eid’l Fitr (Feast of Ramadhan) holiday today.

This means there could be more trading on the remaining days, Mangun said.

“Markets that trade sideways are building momentum for a bigger move either higher or lower. The longer it moves sideways, the bigger the move. Our market will continue moving sideways and perhaps even test support at 5,000 toward the end of the second quarter as economic data will be worse than the previous quarter,” he said.

At the same time he said the market can move higher toward the end of the year as the economy is poised to bounce back stronger in the third and fourth quarters if everything goes well with the containment of the pandemic and the restarting of the broader economy.