WEEKLY SHARES OUTLOOK

Market may extend losses on US election concerns

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LOCAL equities are seen to plunge further this week as uncertainties about the outcome of the US elections on November 8 put investors on the defensive and on the selling side.

“We expect the PSEi [Philippine Stock Exchange index] to carry a lot of volatility this week, with a trend bias still on the bearish side. Oversold rallies are also expected to occur…recovery will not be sustained. But in case of a sustained rally scenario, maximum upside we see is at a 200-day moving average or 7,404 [points],” said Luis Limlingan, managing director of Regina Capital Development Corp.

“All are hinged on US elections this week, so we’ll see the trend after the outcomes on Wednesday,” he added.

Limlingan said with persistent volatility and corrective pressure mostly due to the US elections, the benchmark index may further stretch its losses to the 7,090-points level, therefore discouraging aggressive buys as “the index is likely to correct more rather than recover, at least for the next one to two weeks.”


Analysts expect the yearend PSEi levels to range from 7,600 to 7,800, with potential upside depending on the third quarter corporate earnings and gross domestic product (GDP) releases, while plagued by the expected US Federal Reserve interest rate hike in December.

BPI Asset Management shared the same negative sentiment, saying: “We expect the PSEi to track international markets again due to the lack of significant local catalysts, with the US elections taking center stage. Expect the PSEi to trade between 7,150 [and]7,350.”

Online brokerage firm 2TradeAsia.com agrees with this view, citing that the “risk premium” from the deadlocked presidential match between Donald Trump and Hillary Clinton would not only affect global stock markets but also reverberate in bond markets and heighten volatility in foreign exchange.

“Until the political storm clears in the US, we see fluctuations across global equities ‘til the final victor has been officially proclaimed,” 2TradeAsia.com said.

“This week, we see a mixed bag from listed firms, as nine months earnings results are released. This would include index heavyweights like Globe Telecom Inc., PLDT Inc., San Miguel Corp., Energy Development Corp., Ayala Corp. and International Container Terminal Services Inc., to name a few. Chart-wise, the critical support zone to watch is 7,000, given the wave of net foreign selling lately,” it added.

On Friday, the main PSE index rose 0.93 percent or 66.46 points to 7,227.37, while the All Shares index climbed 0.89 percent or 37.95 points to 4,325.72.

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