Cautious trading seen this week on global growth jitters

Local stocks are seen trading with caution this week as fresh global growth jitters emerge.

Last week, the main-share Philippine Stock Exchange index (PSEi) rose by 155.34 points, or 2 percent, to close on Friday at 7,797.11 as investors scouted for bargains.

However, trading volume thinned out last week while foreign investors turned into net sellers, resulting in a net outflow of P301.3 million from local equities.

There were likewise initial jitters on President Duterte’s choice for the new Bangko Sentral ng Pilipinas, former Budget Secretary Benjamin Diokno, but the perception that he had a dovish bias was eventually seen as favorable to local equities.

The slowdown in February inflation to 3.8 percent from 4.4 percent in January and prospects of some monetary easing in the coming months helped lift the market from the week’s low of 7,595.92, noted BDO Unibank chief strategist Jonathan Ravelas.

“The week’s close at 7,797.11 highlights some support exists near 7,500 levels. Look for test of the 7,950 to 8,000 levels in the near term,” Ravelas said.

Christopher Mangun, head of research at Eagle Equities Inc., said while the PSEi bounced last week, his biggest concern was that this happened on low trading volumes.

“This tells me that investors are still not convinced of the rally,” he said.

Even retail traders that focused on second-liners and speculative issues started to sit on the sidelines, he said.

If trading volumes would remain thin, Mangun said the main index might continue trading between 7,600 and 7,900.