Bearish bias to burden stocks

MANILA, Philippines — The local stock market is seen moving with a bearish bias this week as geopolitical concerns abroad and ongoing political issues in the country are expected to keep investors on the sidelines.

Despite ending the week in the red at 5,976.77 last Friday, the benchmark Philippine Stock Exchange index (PSEi) managed to advance by 0.27 percent week-on-week.

Online brokerage 2TradeAsia.com said the improvement came as selective bargain hunting in index heavyweights and pockets of earnings resilience offset cautious sentiment from mixed corporate results, global uncertainty and lingering geopolitical risks.

“While the macro backdrop is sobering, the concentration of liquidity into blue-chip financials offers a stabilizing floor for disciplined portfolios. Bouts of technical weakness can be used to accumulate yield-heavy positions, amid what is shaping to be a prolonged period of sluggish growth,” 2TradeAsia said.

Despite showing positive momentum in the past two weeks due to bargain hunting with support from foreign funds, the local market’s overall trading has been tepid, according to Philstocks Financial research manager Japhet Tantiangco.

He said this reflects weak investor confidence amid macroeconomic and political concerns.

This week, Tantiangco said the local market could move with a downward bias on profit taking following a two-week rally as lingering concerns may continue to weigh on sentiment.

“The Middle East conflict has been ongoing for more than one and a half month already with no deal in sight. This keeps global oil prices elevated with Brent crude maintaining its ground at the $100 per barrel level. Fears that the conflict would re-escalate may keep investors on the edge,” he said.

Tantiangco said the local currency’s weak position poses upside risks to the Philippines’ inflation and may also discourage foreigners from investing in the country.

Further, he said the ongoing political turmoil in the Senate may continue to weigh on market sentiment.

“With the market seen to have a bearish bias, investors are advised to maintain caution with their trades,” Tantiangco said.

Immediate support is seen at 5,800, while resistance isat 6,000 to 6,050.