PH SHARES WEEKLY OUTLOOK

Post-Brexit weakness to continue

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Stock market investors will continue to be risk-averse this week as the impact of last week’s ‘Brexit’ is still being felt in world markets, although foreign buyers may help to mitigate any decline, analysts said over the weekend.

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Victor Immanuel Felix, equity research analyst at AB Capital Securities Inc., said that local investors would be in a wait-and-see mode for the week and thus stay away from risky assets such as the equities market as they monitor how far the pound sterling might drop.

Nonetheless, Felix noted that foreign investors remain bullish regarding the local economic condition as shown by the strong net foreign buying last week that hit P4.35 billion.

“This indicates that local investors are those that have become risk-off in light of the UK referendum,” Felix said.

The key barometer Philippine Stock Exchange Index (PSEi) wiped of its early last week’s gain by as much as 145 points, thus merely gaining 0.10 percent week-on-week to settle at 7, 629.72, while the broader All Shares index slightly dipped by 0.15 percent week versus week to settle at 4, 542.64.

“The trading this week would be downward as more and more investors would try to see the bottom [of the main board], then enter again to bargain hunt,” Felix said.

Key global economic data both from the US and China will likewise be closely monitored this week as stakeholders look for better global economic developments.

Fo r the week, investors will be monitoring the results of key indicators in the global market, including US’ second quarter gross domestic product as well as US and China’s manufacturing numbers for July, Felix said.

He added, however, “There is no good news lining up, and unless we receive something positive this week the trading range could be as low as 7,200 to 7,500.”

Meanwhile, Hans Sicat, President and Chief Executive Officer of the PSE, said that the Brexit would have an impact on the main board’s performance over the “next few days,” as a residual reaction of t he market on the possible consequences of the UK’s choice to disassociate itself from the EU.

Nevertheless, he said that the PSEi would remain afloat in the medium term.

“Medium term, however, we think that the Philippine market will not be adversely affected [by the Brexit]as it is supported by the country’s solid economic fundamentals and the inherent strength of the local financial market,” Sicat said.

All sub-indices suffered declines last week, with the mining and oil sector being the worst-affected, but for a different reason, shedding 8.49 percent.

The steep fall was a reaction to the appointment and subsequent acceptance of Regina “Gina” Paz Lopez, a well-known anti-mining advocate, as the next Department of Environment and Natural Resources secretary.

“The incoming administration must make a “clear-cut” policy on mining so as to ease the level of uncertainty among mining investors and stakeholders,” Victor Benavidez, general manager of Alakor Securities Corp. said.

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