Volatility seen amid uncertainties due to virus

LOCAL SHARES are seen to remain volatile this week as investors grapple with uncertainties brought by the coronavirus disease 2019 (COVID -19) pandemic.

The benchmark Philippine Stock Exchange index (PSEi) gained 57.67 points or 1% to close at 5,793.94 on Friday. But on a weekly basis, it dropped 14.42% to mark the main index’s third straight week of decline.

Value turnover averaged P7.79 billion, up 28% from P6.07 billion in the week prior. Net foreign selling last week increased to an average of P748.05 million from P449.93 million.

Last week marked the market’s entry into bear territory after losing 6.76% to 6,312.61 on Monday. It also saw two instances of the PSE triggering a 15-minute trading halt — called a circuit breaker — after falling at least 10% intraday.

The selloff in the market was primarily due to investor concerns over the worsening COVID-19 spread in the Philippines. After the World Health Organization officially declared the virus a pandemic last week, the Health department announced daily increases in confirmed cases in the country. As of Sunday afternoon, the Philippines had 111 confirmed cases and eight deaths due to the virus.

“[This] week, the market will continue to be volatile ranging from a support of around 5,000 to a resistance of 6,000. Definitely, this would be broad based on its negative effects especially on how the containment has effectively resulted,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message yesterday.

“We see the stock market to under-perform [this] week as investors and fund managers digest the full impact of the disruption caused by the community quarantine and the rising number of COVID-19 cases,” trader Gab L. Magsino said in a text message Saturday.

He noted while the assistance from state pension funds may have lifted the market last Friday, “stocks could still suffer a decline should the number of infected locally increase at the rates similar to what we have seen in Europe and Middle East.”

For Philstocks Financial, Inc. Research Associate Claire T. Alviar, while the market may retain its volatility, a catalyst for the week is the expected announcement of a rate reduction from the central bank.

“The government’s instruction to the (state pension funds) to support the stock market by at least doubling daily average purchase volumes would give boost to the investors’ sentiment. This is in addition to the anticipated rate cut from the (Bangko Sentral ng Pilipinas) to somehow cushion the COVID-19 impact,” she said in a text message.

For PNB Securities, Inc. President Manuel Antonio G. Lisbona, another source of encouragement for investors is the improved performance of US markets last week. “This will likely have a spillover effect on our market,” he said.

Mr. Lisbona is putting initial support for the week between 4,800 and 4,900 and resistance at 6,700.