STOCK-MARKET OUTLOOK

Last week

Share prices declined for the second straight week as investors were still unimpressed by the performance of the Philippine economy.

The benchmark Philippine Stock Exchange index ( PSEI) lost 70.24 points to close at 5,838.66 points.

Trading was lackluster for almost the entire week, and Friday's trade value was only at P3.36 billion, way below the P5.81 billion average for the year.

Average trading value for the week ended at P3.93 billion, as foreign investors continue to dump local shares with net sell of P2.22 billion.

“There is no surprise that investors are cautious with constant flow of dismal economic data. The results of the Bangko Sentral ng Pilipinas Business Expectation Survey and the Consumer Expectation Survey were released last week. Consumer confidence for the third quarter plunged to all- time low,” Christopher Mangun, research head at AAA Securities Inc., said.

“We saw a lot of action in second- line telco companies with Now Corp. ending as the top gainer for the week after it was granted an extension on its provisional license to operate mobile frequencies. However, it ended way below its high for the week,” Mangun added.

Other subindices ended mixed with the broader All Shares index falling 32.95 points to close at 3,520.63 points, the Financials index declining 15.49 to 1,139.08, the Industrial index rising 27.53 to 7,872.50, the Holding Firms plunging 107.73 to 6,035.96, the Property index shedding 17.35 to 2,725.90, the Services index dipping 14.31 to 1,449.19 and the Mining and Oil index dropping 186.62 to 5,874.06.

For the week, losers led gainers 145 to 79 and 25 shares were unchanged. Top gainers for the week were Now Corp., Metro Alliance Holdings and Equities Corp. A, Filipino Fund Inc., Philippine Trust Co., DITO CME Holdings Corp. and Island Information and Technology Inc.

Top losers were F and J Prince Corp. A, Abra Mining and Industrial Corp., Lepanto Consolidated Mining Co. A and B shares, Berjaya Philippines Inc., Apex Mining Co. Inc. and Manila Mining A and B shares.

This week

Share prices may continue to decline this week, as it will test the major support level of 5,690 points, due to the lack of good news that will perk up investors.

“This is still in line with our projection that the market will traded sideways with a negative bias as it builds momentum for a stronger move higher. The sentiment needs to improve significantly before we could see the market make progress. It could continue sideways for several weeks and the major move may come toward the end of the year,” Mangun said.

“Although most believe that we have seen the worst, not enough investors are convinced that stock prices are undervalued,” he said.

Meanwhile, broker 2Tradeasia said as September closes by mid- week, many are also expecting that Metro Manila and nearby provinces will shift to a more relaxed modified general community quarantine.

With the upcoming third quarter reporting season, the broker said investors are still expecting that earnings will remain depressed.

“Our base- case scenario on EPS [earnings per share] contraction for 2020 is at least 48 percent on core income. The silver lining is that investor psyche has been conditioned to find coal in a gold mine and it may take little to positively surprise markets,” it said.

It sees immediate support for the main index at 5,700 points and resistance at 6,000 points.

Stock picks

Broker Regina Capital Development Corp. gave a buy recommendation when its support price of P2.47 and P2.80 hold for the stock of Merrymart Consumer Corp. as its indicators are still on the buy signs.

“The sustained buy signs from indicators may dampen any selling momentum to come in the next few days. As such, it is possible that MM will start to consolidate sideways above the support at P2.80,” the broker said.

Merrymart shares closed Friday at P3.05 apiece.

Meanwhile, it gave a buy recommendation on breakout on the stock of Metropolitan Bank and Trust Co. after it sustained a two- day rally that reached an intra- day high of P36.65 per share last week

“All indicators are showing increasing buying pressure, which supports a possible breakout past the said upper bound. Next resistance to watch out for is at P37.25,” the broker said.

Metrobank shares closed last week at P37.60.