Weak trading to persist

Investors are bracing for another week of sluggish trading after the main index broke past key support levels last week.

The main-share Philippine Stock Exchange index (PSEi) lost 4.02 percent to close on Friday at 7,641.77, declining for the fourth straight week.

Key events last week included the effectivity of the MSCI adjustments alongside a bigger allocation to Chinese equities.

A low of 7,587.99 was hit by the PSEi during the week.

“The week’s close at 7,641.77 signals further weakness toward the 7,500 after the market just sliced below the 7,800 levels [like a hot knife through butter],” BDO Unibank chief strategist Jonathan Ravelas said.

“Look to see if 7,500 support levels hold and a bounce occurs. Watch this space,” he said.

While equities markets around the world were mainly flat with a positive bias last week, the main index ended with its biggest weekly loss going back to June of last year, noted Christopher Mangun, head of research at Eagle Equities Inc.

For the month of February, the index lost 3.7 percent, mostly incurred in the last few trading days of the month.

“The next couple of weeks are going to decide the fate of our market for the rest of the year. The main index failed to hold any of our support lines and broke below the uptrend that started in November,” Mangun said.

“The only hope now is that it holds support at 7,500,” he added.

“[This] week is the release of February inflation. If we see inflation continue to slow, which is most likely to be the case, then this may provide the catalyst that this market badly needs to bounce back and start gaining momentum. Either way, the key is to be selective in which companies and sectors to buy as there will be outliers, even if the market continues to fall,” Mangun said.