PHL shares to remain volatile amid virus fears

SHARES are expected to remain volatile this week, with investors still reacting to developments regarding the coronavirus disease 2019 (COVID -19) pandemic.

The bellwether Philippine Stock Exchange index (PSEi) dropped 134.96 points or 2.49% to 5,266.62 on Friday. But on a weekly basis, the main index climbed 10% to put an end to four straight weeks of decline.

Value turnover fell 7.6% to an average of P6.94 billion week-onweek, while net foreign selling slowed to an average of P773.91 million from the previous week’s P1.27 billion.

“What started off as another week of losses turned into a new entry for the history books as global equities markets reversed sharply and ended with massive gains,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note.

He noted the central bank’s several policy actions were wellreceived by investors, resulting to calmer trading through the week.

“The trend has been the same, we would see a sell down at the open as buyers would not be present, and then, as prices would stop going lower, bargain hunters would come in and scoop up everything they could causing sellers to walk away which would then drive prices higher,” Mr. Mangun noted.

But for the coming week, he said volatility may remain. “Some investors refuse to agree that this is a crisis and are treating it like one massive dip that can be turned into an opportunity. On the other hand, some see it worse than a crisis as human lives are at stake as well as economies. The result is wild swings and colossal reversals….”

Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan shared the same outlook. “We expect that the market will remain volatile and might take cues from US market as COVID-19 still lingers in developed economies and in Europe as well,” he said via text.

He noted while US President Donald Trump approved a $2-trillion fiscal stimulus to address COVID-19 concerns, investors might still focus on how the government will arrest the further spread of the virus.

“We think investors are looking right now for short rallies since the market is very volatile and might remain volatile up until the end of March,” Mr. Tan said.

For AAA Southeast Equities’ Mr. Mangun, trading this week may end lower after the strongerthan-expected gains last week.

“Most investors are not convinced that we have seen the worse. Last week’s rally is widely considered a ‘dead cat bounce’ … based on the notion that even a dead cat will bounce if it falls far enough and fast enough,” he said.

“At the end of the day, the government’s effectivity in handling this crisis will ultimately spell disaster or triumph for our market,” Mr. Mangun added.

AAA Southeast Equities is putting support for the PSEi within 5,000-4,700 and resistance within 5,400-5,800. Philstocks Financial sees the support at 5,000 and resistance at 5,700.