Cautious trading seen to continue

CAUTIOUS trading is seen to remain at the stock market this week as investors lack fresh incentives to load up stocks in the aftermath of the second quarter local corporate earnings reporting season.

The Philippine Stock Exchange index lost 129.46 points or 1.78 percent to 7,278.98 last week. On Friday, financial markets were closed in celebration of Ninoy Aquino Day.

“The week’s close below 7,300 continues to support our view of a march toward the 7,000 levels,” Banco de Oro Unibank chief strategist Jonathan Ravelas said.

Overall, Ravelas said investors remained cautious in view of the devaluation of the Chinese yuan and expectations of slower economic growth in the second quarter of the year.

Ravelas said local interest rates were seen moving sideways in the week ahead.

On the foreign exchange market, the peso depreciated against the US dollar due to the lingering effects of the yuan devaluation. The peso closed at 46.50:$1, weaker than the previous Friday’s close of 46.215. Ravelas said last week’s close of 46.50 signaled that the next level to watch would be the 47-47.50 to $1 level.

“As a result, we are revising our year-end 2015 forecast to 46.25 from 45.50:$1,” Ravelas said. Doris Dumlao-Abadilla