Market to remain cautious

MANILA, Philippines — The local stock market will continue to trade with caution as the COVID-19 situation in the country remains precarious, according to traders.

Immediate support is 6,400 to 6,500, with resistance at 6,650 to 6,800.

“There is a lot of moving parts in trying to read the tea leaves for 2022, but optimism will ultimately stem from suppressing rising COVID cases,” online stock portal 2TradeAsia said.

2TradeAsia said it recalibrated its outlook, in light of the new quarantine measures imposed by the government.

“Our revised model contemplates 30 days of stricter quarantine policy in the Greater Metro Manila area beginning April, which is equivalent to one third of the second quarter. This revision cuts GDP expansion to 5.1 percent for 2021 from seven percent initially, with the downgrade mostly weighed by the domino effect of the enhanced community quarantine (ECQ) in the second and third quarters (negative 190 basis points on average).

The negative impact of the ECQ would spill over in 2022, it said.

“The added economic strain of 2021 restrictions have also also impacted 2022 numbers, with expectations sitting at 7.2 percent from 8.9 percent. As the pandemic remains a developing story, vaccination progress and fiscal stimulus are also likely to influence projects down the line.

We also reiterate that 2022 will be a crucial year given the national and barangay polls, and the possible frontloading in consumption in the quarters preceding the polls will help keep the recovery story burning,” 2TradeAsia.com said.

The PSEi managed to gain for the second week last week, up by 102.08 points or up 1.6 percent after the previous week’s 1.5 percent.

Since the start of 2021, the PSEi had declined by 8.3 percent, said Michael Ricafort of Yuchengco-owned Rizal Commercial Banking Corp.