PH SHARES WEEKLY OUTLOOK

Global cues, not elections to impact PSEi

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Stock market investors are expected to remain on the sidelines this week awaiting the results of the Philippines’ general election, but analysts suggested external factors such as the persistent strength of the Japanese yen and speculations of a US rate hike would still have more of an impact on the market than local political developments.

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Hans Sicat, president and chief executive officer of the local bourse, downplayed the possible effects of the election, saying that the domestic stock market’s volatility at present has little to do with the popularity of presidential frontrunner Rodrigo Duterte.

“Please do not give Duterte too much credit.” Sicat said.

Sicat noted that emerging markets including the Philippines have recently seen foreign outflows to spike by up to $17 billion.

“This has no relation to Duterte, but more of fear on the part of the investors given the impending interest rate hike in the US, the inaction of the Bank of Japan to provide for further stimulus that would temper the yen’s appreciation and other currency differentials being experienced in other economies. Investors are just staying on the sidelines,” the top executive said.

Further, he said that the local market is expected to pick up after the elections, as many people are moving away from risky assets such as equities at present.

Last week, the benchmark Philippine Stock Exchange Index (PSEi) shed 2.34 percent or 167 points week-on-week ending the five-day trading below the 7,000-point level at 6,991.

All subindices incurred losses with the holding firms sustaining the largest fall at 3.3 percent, followed by services companies declining by 2.54 percent.

Average total value turn over was low at P5.82 billion, 8 percent lower than the previous week, with losers prevailing over winners, 114 to 72.

With regard to the incoming administration, Sicat said, “We believe that regardless of who would be elected as president, the country’s economic fundamentals and attractiveness remain.”

“We have to see the new economic team of course. But we are confident that these guys would be economic guys, and thus the market would unlikely to have wild swings regardless of who the president might be.”

Meanwhile, Victor Felix, equity analyst at AB Capital Securities Inc. noted that last week’s fall was caused by the BoJ’s decision to hold off on more stimulus that would have temper the appreciation of yen.

That decision, which was a reverse of the analysts and economists expectations, Felix said, “ is continuing to weigh on risky assets such as equities.”

Further, he noted that the slowdown in China’s economy, as shown by a number of disappointing indicators, is weighing on the market, most recently the country’s April manufacturing, import, and export data, all of which fell below expectations.

“Filipinos will also vote in the national elections on Monday causing more economic and political uncertainty in the local markets,” Felix said.

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