The domestic stock market will be flat this week, analysts said over the weekend, as foreign investors are likely to temporarily divest their equity interests from the Philippines to other Southeast Asian countries to wait out the last 40 days before the national elections on May 9.
Victor Immanuel Felix, equity analyst at AB Capital Securities Inc., said that with the national elections fast approaching, equity investors are now in the wait-and-see attitude, thus the market consolidated last week despite expectations that window dressing during the period would boost the local bourse.
“Coming into April I think the market will be flat because we are 40 days from the elections. Foreign investors might be more risk averse. They go to our neighboring peers but only temporarily or just until after our elections. Thus, a flat market is what we expect,” Felix said.
Further, he noted that the local bourse could dip this week, with the trading range of 7,100 to 7,300.
“There is a strong psychological support at 7,000 flat so there is a lot of buying pressure at that level. Investors do not want to go below that [7,000 level]. Perhaps, after elections, if the right [presidential]candidate wins, the index [Philippine Stock Exchange Index] could pick up immediately from the level of 7,000, 7,100 and 7,200,” Felix said.
Hence, Felix said should the PSEi dip to 7,000 level, investors would swarm the local bourse to purchase shares to keep its level above well above 7,000.
After hitting a fresh high at the 7,400-level, the PSEi fell 1.56 percent or 115 points to 7,245 week-on-week. The decline mainly affected the mining and oil sector with a 2.95 percent drop, followed by financial firms declining 2.13 percent, and the services sector, which shed 2.13 percent.
Also last week, value turnover sank 4.1 percent to P6.861 billion, and while foreigners remained net buyers at P65 million, this was 82 percent lower than the previous week.
Winners slightly edged out losers during last week’s trading, 103 to 98.
Felix explained that although the PSEi may be flat or even dip during the week, the country’s stock market remains “healthy.”
“I think we have reached the 7,400 level too fast. It was a bit premature. Thus, if it [the market]weakens during this week, it is only healthy,” he added.
Meanwhile, Luis Limlingan, head of research and sales at Regina Capital Development Corp., agreed with Felix saying that the local bourse is expected to trade in a “corrective mode” this week.
“With 7,200 showing strength for the last five trading days, the index will likely move in a sideways to down manner. In case of rallies, we advise taking advantage of those to unload positions because we see heavy resistance at 7,400,” he said in a text message.