PH SHARES WEEKLY OUTLOOK

Further correction likely as investors stay wary

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Philippine share prices are likely to drop again this week as a looming interest rate hike by the US Federal Reserve, as well as mounting controversy surrounding the next Administration’s possible appointments, prod investors to sell their positions on the local bourse.

Victor Benavidez, general manager of Alakor Securities Corp., said the market is seeking clearer signs from the Fed, which has taken a hawkish stance, and the personalities that will form the next economic team of the incoming government.

“This week I think we [the market]will settle at the 7,200-point level and wait for the Federal Reserve and the completion of the forthcoming administration’s new cabinet members,” Benavidez said.

“The market is still digesting the various events that took the market on an upswing, and this week the market is still likely to be in the correction mode,” he added.


Last week, the benchmark Philippine Stock Exchange index (PSEi) shed 1.9 percent or 137 points to close the five-day trading at P7,299, with the services and industrial sectors incurring the highest losses of 3.5 percent and 2 percent, respectively.

Average value turn over during the period stood at P8.54 billion, 4.4 percent higher week-on-week. Advancing issues modestly outnumbered losers, 108 to 89.

Meanwhile, Joseph Roxas, president of Eagle Equity Inc. said that major investors would still remain “wary.”

“I think the market will be wary until June. The market is still consolidating, especially with the Federal Reserve’s hawkish stance that may lead to interest rates adjustment come next month,” Roxas said.

In the event that the Federal Reserve decide to raise its key interest rates, many investors would likely sell their positions in the riskier equities market, and turn to the bond market for safer and better yields.

But Justino Calaycay, head of research and marketing at A&A Securities Inc., sounded a cautiously optimistic note, suggesting that investors could take advantage of the main index’s level having been lowered by almost 2 percent.

“Despite the probability of a rate hike in the US and the pessimism of investors over the possible appointments in the incoming administration, there is still a reason to buy little by little this week as we shed nearly 2 percent [last week],” he said.

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