Investors give up hope for Santa Claus rally
Light trading is seen this shortened trading week as most investors have switched on to the Christmas holiday mode.
Last week, the main-share Philippine Stock Exchange index (PSEi) lost a total of 104.51 points or 1.3 percent to close at 7,773.12 due to large foreign outflows. Investors were cautious amid the shakeup of water concessionaires Manila Water Co. and Maynilad Water Services Inc., which prompted many to price in a possible nonextension of their respective water distribution deals after 2022.
The government, however, later softened its stance and indicated that the contracts would not be revoked, but would be renegotiated for better terms.
There will be no trading on Tuesday and Wednesday due to the Christmas break.
BDO Unibank chief strategist Jonathan Ravelas said investors had reduced their exposure to local equities after the PSEi failed to sustain the rally above the 8,000 levels.
“The week’s close at 7,773.12 highlights the risk of a test of the year’s low at 7,514.05,” Ravelas said.
Papa Securities, on the other hand, sees a chance for the PSEi to bounce to the 7,900 level by yearend, representing the 200-day moving average.
Since the start of the year, the PSEi has wiped out most of the gains seen since the start of the year.
With only a few trading days before the end of the year, most investors have given up hopes for a Santa Claus rally. Since the start of the year, the PSEi is still up by 307.1 points or a modest 4.1 percent from last year’s finish.
In 2018, the PSEi closed at 7,466,02, down by 12.8 percent from the previous year’s level. INQ
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