Local stocks are seen to continue their downtrend this week alongside thin trading volumes as the Chinese “ghost month” ushers in.
Last week, the main-share Philippine Stock Exchange index lost 229.67 points or 3.4 percent to end on Friday at 6,533.95, aggravated by a discounted share-sale by the country’s most valuable company SM Investments.
Meanwhile, the Lunar ghost month, the period when superstitious Asian investors refrain from big-ticket moves, is set to begin this Wednesday and run until Sept. 4.
Banco de Oro Unibank chief strategist Jonathan Ravelas said that chart-wise, the market had difficulty sustaining the 6,750-6,800 levels. He added that last Friday’s break below 6,630 might lead to further losses toward the 6,000-6,350 level.
“As the market finally dips into the seasonal month of tempered trading this August, much of the bias now would be the prolonging of the downtrend,” said AB Capital Securities analyst Abbygayle Estrella. “External factors and technical indicators both connive for such movement: The (US) Fed’s tapering of its third round of quantitative easing (QE) is a central risk since the extra liquidity that Asian and emerging markets are enjoying would be vacuumed back to the US.” Doris C. Dumlao