Investors may see the calming of nerves this week after last week’s election jitters and global economic uncertainties.
The Philippine Stock Exchange index (PSEi) closed Friday’s trading at 6,379.17, down 380.73 points, equivalent to 5.63 percent from the previous week’s close.
Since its record high of 9,058.62 on Jan. 29, 2018, the PSEi has been in the bear territory the past four years.
Online stockbroker 2Tradeasia.com said investors shrugged off the 8.3- percent better- than -market consensus GDP growth for the first quarter “under the market’s knee-jerk reaction to a Marco administration come next quarter.”
“Anxiety may be stemming from policy uncertainties, heading into a fragile global economy that is very much different from the baton pass the market saw in 2016,” 2Tradeasia.com said.
The market was tinged red as all counters declined with deep losses in mining and oil (down 7.39 percent), holdings ( down 6.63 percent), and property (down 6.08 percent).
“The market was much more active with average value turnover jumping to P12 billion while average net foreign selling widened to P1.04 billion. Decliners dominated the gainers 84-46,” it said.
“The silver lining is that the speculations are (the) new cabinet (members), particularly those responsible for economic policy, are technocrats that the market is familiar with, and should balm the outlook in the short-term,” it added.
2Tradeasia.com said discussion should now move towards whether or not the floated fiscal consolidation will truly materialize and if it will involve tax hikes.
It said attention will also focus on the Monetary Bard’s meeting this week, with the market expecting a parallel hawkish move from the Fed (Federal Reserves) given that regional central banks have also adjusted in the past week.
“Similarly, eyes will be on the 4 large caps reporting corporate earnings (this) week (representing 6 percent of the PSEi basket),” it said.
2Tradeasia.com noted company valuations have come down to as much as 14x forward PE given recent successive drops, but jitters at the macro-level are prompting re-assessments of company prospects particularly those that can maintain capex and dividend payouts amid uncertainty in the overall business environment.
Japhet Tantiangco, analyst at Philstocks Financial Inc., said investors should not expect a strong rally by the market for the week.
“With five straight days of decline, we may see bargain- hunting in this week’s trading,” he said.
Tantiangco said worries over inflation may continue to weigh on sentiment especially with the approval of the minimum wage increase in the National Capital Region and Western Visayas.
“The rising inflation and the strong first quarter GDP data strengthen the case for the Bangko Sentral ng Pilipinas (BSP) to hike its policy rates which in turn would raise the borrowing costs for firms. Thus, investors are expected to watch out for the BSP’s policy meeting (this) week. Offshore, inflation and interest rate worries may continue to weigh on Wall Street which in turn could produce negative spillovers for the local bourse,” he said.
“Investors are also expected to watch out for more clues on the economic policies, including the economic team, of Mr. Ferdinand Marcos Jr. who is set to become the next president of the Philippines. Policies that would: help sustain economic recovery; control the rise in prices; keep our COVID-19 situation under control; strengthen the labor market; and address our elevated debt levels may give sentiment a boost,” he added.
