Market seen moving sideways this week

The stock market is expected to move sideways this week with only three trading days because of the holiday break, traders said.

Philippine Stock Exchange chief operating office Roel Refran said it’s difficult to say when the global uncertainties would end, but conceded that these factors have drastically affected the market.

“We really can’t say yet,” Refran said when asked about the stock index’s level by yearend.

The PSE may miss its capital raising target of P200 billion because of the bearish sentiment in the market that has been discouraging companies to raise capital through equities.

Christopher Mangun of Eagle Equities said investors may continue to stay on the sidelines.

“With only three trading days next week, it is to be expected that we will see little action in the market as investors may stay on the sideline and start the holidays before everybody else. By now it is certain that the index will end the month of October down two to three percent unless we see some window dressing,” Mangun said.

Market investors are hoping the index could stay above the 7,000 level, but based on the current market sentiment, the index will trade sideways with a negative bias.

“It will be a miracle if it stays above 7,000. Given the current situation, the technicals are showing signs that this market may find a bottom soon,” he said. But all is not lost, he said. “Historically, October to December has always been a turning point for our market. In the last 18 years, buying the index between the fourth quarter and closing positions by the end of the first quarter of the following year has showed the least risk,” he said.

Only three years posted losses in these periods including the two years of the 2007 to 2008 financial crisis.

If inflation starts to wind down, the market may start to recover, he said.

Last week, it was a bad time for global equities markets and this affected the Philippine Stock Exchange index which was down by 87.19 points or 1.22 percent to close at 7,064.33.

“It traded sideways with a negative bias which is what we expected. Despite the losses, the index managed to close above the key-support level at 7,000 after falling beneath it several times this week. Our market also performed better than our Asian peers. It started the week up about one percent followed by three days of declines,” Mangun said.

Net foreign selling for the week rose significantly to P2.40-billion.

The financial sector took the biggest hit, down by more than three percent.

This as investors are dumping banking shares as they expect a significant drop in earnings because of the massive increase in interest rates.

“The market’s performance last week is clearly an indication that we are not out of the woods yet,” he said.