Market to remain cautious in wake of Friday gains

LOCAL SHARES may not have enough impetus to sustain last Friday’s gains, with developments in the Sino-US trade row expected to remain top of mind for investors.

After a fluctuating performance as investors awaited development on US-China trade talks last week, the Philippine Stock Exchange index (PSEi) gained 84.91 points or 1.09% on Friday to close at 7,849.94. Investors abroad, however, turned bearish, ending the day with P233.69 million in net foreign sales.

The main index closed the Oct. 7-11 trading period up by 1.89%, capping three straight weeks of decline.

Value turnover last week reached P36.54 billion, but trading volume was fueled by new listed firms Axelum Resources Corp. (9.93 million) and AllHome Corp. (29.71 million).

Integrated coconut products manufacturer Axelum made its trading debut last Monday, ending the week down 1 centavo or 0.22% to P4.50 apiece, while Villar-led home retailer AllHome also made its market foray on Thursday, closing Friday down 2 centavos or 0.17% to P11.54 apiece.

“The gains that we saw this week canceled out all the losses that we have seen in the last two weeks. Here at the PSE, a lot happened as we had two new companies list on the exchange… The main index ended with its biggest weekly gain since May,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market report.

He said that Friday’s rally kept the PSEi above the 7,750 support line, and is now watching whether it can break above 8,000. “Sellers may have walked away (last) week, except on Axelum, but we may see them come back once it hits 8,000,” Mr. Mangun said.

While US-China trade talks last week yielded some gains — with US President Donald Trump suspending a planned tariff hike and outlining the first phase of a deal that could end their trade war — Mr. Mangun warned that any resulting market cheer may be fleeting and may not be enough to sustain a lift this week. “The optimism on the trade talks with the US may be short-lived which means we may see the sentiment go sour again in the coming weeks. Investors are still trading on sentiment and, because of this, we may not see a solid rally moving forward,” he said.

For Papa Securities Corp. Sales Associate Gabriel Jose F. Perez, any development in trade talks between the world’s two biggest economies will be the primary driver of the local stock market for some time in the absence of any compelling local news. “Moves next week would likely be swayed by any developments in Trump and the Chinese vicepremier’s meeting soon,” he said in an e-mail Friday. “Resistance is only a few points away at the 7,900-8,000 mark.”

Mr. Mangun remains cautious, saying: “We do not think that the gains (last) week are enough to bring investors completely back into this market. These may be investors that are bargain-hunting as most stocks are at incredibly strong support levels.” —