STOCK-MARKET OUTLOOK

Last week

Share prices dropped last week, with the main index returning to the 6,600-point level, as investors put more weight on Fitch ratings’ decision to downgrade its outlook on the Philippines to “negative” from “stable.”

The benchmark Philippine Stock exchange index (Psei) shed 141.09 points to close at 6,693.83 points.

The downgraded outlook, which Fitch ratings attributed to a growing budget deficit and debt, weighed on investor sentiment. Investors shrugged off the shift of Metro Manila and nearby provinces to a more relaxed quarantine classification.

Volume of trade for the week was thin and reached a weekly average of only P4.79 billion.

Foreign investors made up 39 percent of total trades for the week but were still net sellers at P2.89 billion.

all other subindices ended in the red, led by the broader all Shares index that lost 96.60 points to 4,137.94, the Financials index shed 24.03 to 1,453.75, the Industrial index fell 199.14 to 9,393.85, the holding Firms index plunged 189.38 to 6,651.30, the Property index retreated 93.87 to 3,200.36, the Services index was down 9.98 to 1,585.15 and the Mining and Oil index declined 46.05 to 9,650.11.

For the week, losers edged gainers 41 to 189 and 17 shares were unchanged.

Top gainers were Manila Mining Corp. a, The Philippine Stock exchange Inc., SBS Philippines Corp., IPM holdings Inc., acesite (Phils.) hotel Corp. and Century Pacific Food Inc.

Top losers were Chemical Industries of the Philippines Inc., Cebu Landmasters Inc., Greenergy holdings Inc., Philippine realty and holdings Corp., Cityland Development Corp. and Discovery World Corp.

this week

Share prices may remain subdued this week as the spread of the delta variant of Covid-19 may dampen investor appetite for stocks.

It will be a four-day trading week as trading is suspended on Tuesday, July 20, in observance of eid’l adha or the Feast of Sacrifice for the Muslims.

“Market participants may have to contend with another wave of pessimism within the next few weeks, seeking for feelers as to how this [the delta variant of Covid-19] will impact public health policy, given the recent move to GCQ [general community quarantine] by month-end,” said broker 2Tradeasia.com.

early this month, Thailand reimplemented a much stricter lockdown of Greater Bangkok due to the third wave of infections from the delta variant. Vietnam also did the same to its capital as cases reached a new high.

“Brace for volatility across asset classes, especially those tied to the country’s macro recovery story,” the broker said.

It said investors will also look beyond second quarter earnings, which will be announced by companies within the next few weeks. Many firms are expected to post double-digit growth in earnings, but this is mostly due to “base effects” as the country was under the most stringent quarantine classification in april to June last year. Investors will look at the companies’ third quarter figures and how the delta variant would affect their financial performance, the broker said.

“Development over the next sessions will be critical, as markets are again at the mercy of public health policy. Suffice to say, there is little incentive for psyche to move past the 7,000-point mark, at least for now.”

Immediate support for the main index is seen at 6,600 points while resistance is forecast at 6,900 points.