Virus fears continue to bug shares

SHARES OUTLOOK FOR T H E WEEK

ANALYSTS see Philippine shares to continue trading at a downward bias as resurgence of coronavirus disease 2019 (Covid-19) cases dampen investor sentiment.

“Bearish sentiment is seen to be building up as the local market posted two straight weeks of decline, shedding 4.39 percent in the process. This trend may continue next week as Covid-19 risks weigh on economic recovery hopes,” Philstocks Financial Inc. research analyst Japhet Tantiangco said.

He added that the country’s strength and speed of recovery remain to be uncertain as confirmed cases continue to rise locally.

“[The increase] points to a possible extension of our social restrictions, which will keep our economy from operating at full capacity. A reversion to stricter forms may even be possible, which if done, would aggravate the economy’s losses,” Tantiangco said.

Foreign funds outflow may also continue as the global economy grapples with the pandemic’s impact, Tantiangco further said.

“This week, net foreign selling has averaged P1.15 billion, higher than the prior week’s average by 13.06 percent,” he noted.

Tantiangco maintains support at 6,100, while resistance is at 6,350. He expects the market to test the former this week.

Likewise, Diversified Securities Inc. trader Aniceto Pangan said the market would still trade at a downward bias amid the rise in Covid-19 cases globally.

“Market will continue to consolidate with a downward bias on the resurgence of infections of the coronavirus globally after the reopening of the economy in most countries around the world such as the US, China, Japan, Brazil, etc,” he said.

Pangan added that most governments are imposing stricter quarantine measures again to contain the virus, which slows down economic

activity anew.

As a result, he sees psychological key support of the index at 6,000 while resistance is at 6,375.

Research from AAA Equities also expects the market to trade sideways with a negative bias as investors assess weak earnings and negative second quarter growth figures.

“We may see the market move lower at the beginning of next

week as it tests support at 5,950 and then start to move higher towards the end of the week,” it said.

It added that foreign investors still show lack of confidence in the local bourse as foreign outflows since the beginning of the year reached more than P60 billion.

“Foreign investors may be flocking to western equities as markets abroad are at all-time highs. These outflows dampened the sentiment and have kept our market from moving higher despite the massive turnout from local investors,” AAA Equities noted.