THE Philippine stock market is expected to move sideways this week, with investors likely to take a cautious stance following last week’s volatile trade and as they await signals from overseas markets.
Online brokerage firm 2TradeAsia.com said, “Caution might still run high, pending forward-looking statements from the IMF (International Monetary Fund) and World Bank, during their three-day meeting this week, including risks that should be guarded before 2016 draws to a close.”
“Gauges might trend sideways for now, possibly with [a]downward bias on any intra-day ascents, unless Friday’s net foreign buying is sustained this week,” it added.
The brokerage said investors will be watchful on whether the peso’s weakness will persist and for indications on yields of the Bureau of Treasury’s upcoming placements in light of the administration’s resolve to increase infrastructure spending.
It said the market will also be waiting for the results of the House probe on the alleged New Bilibid Prison drug trade (October 5) and extrajudicial killings (October 3-5).
Nonetheless, it noted that some fund managers may employ fourth quarter window-dressing, which may provide support for the benchmark Philippine Stock Exchange index (PSEi).
For his part, Luis Limlingan, managing director of Regina Capital Development Corp, said: “We expect the PSEi to trade sideways for the week, with a slight bias on the upside due to the recently formed higher low base at 7,550 to 7,530, and its improved direction and momentum readings for the last three weeks.”
“However, this does not mean that the index is on its way to establishing an uptrend as it is currently trading in a high-volatility environment,” he added.
Observing the sharp highs and lows in trading last week, Limlingan said a similar trend may also be likely this week, advising investors to adopt “cautious trading” as the prevailing volatility makes the market “vulnerable to sudden spikes.”
On Friday, the benchmark index dropped 1.10 percent or 85.13 points to 7,629.73, while the broader All Shares index fell 0.88 percent or 40.15 points to 4,533.24.