Sluggish stock trading seen this week

Sluggish sentiment is seen lingering in the local stock market this week as investors await more corporate earnings reports alongside developments on the COVID-19 contagion.

Last week, the main-share Philippine Stock Exchange index (PSEi) gained 87.78 points or 1.2 percent to close on Friday at 7,369.78.

“The market will continue to to trade within the 7,200 to 7,500 band this week given the prevailing headwinds buffeting sentiment,” PNB Securities president Manuel Lisbona said.

Aside from renewed COVID-19 jitters, Lisbona said that since the week would be short of one trading day, it was possible that investors would lay low for the coming session.

There will be no trading on Tuesday, Feb. 25, due to a national holiday in observance of the People Power anniversary.

“A sustained break above 7,500 will attract more investors to reenter the market. Otherwise, the initial line in the sand is 7,200,” Lisbona said.

BDO Unibank chief strategist Jonathan Ravelas said the week’s close at 7,369.78 highlighted consolidation between 7,300 and 7,500.

Despite last week’s bounce, Ravelas said bear trades continued to dominate the trading space.

“Major support lies at 7,300 levels,” he added.

In a research note dated Feb. 17, JP Morgan said the base-case scenario was for COVID-19 infection toll to peak by the first week of March at 128,000. The mortality rate assumed in its model was unchanged at 2 percent.

JP Morgan’s epidemiology model forecasts the virus outbreak in mainland China while observing the contagion in Singapore, Japan, South Korea and some European countries.

“At this stage, we see the virus contagion risk remaining relatively small, considering hospital capacity and strong local efforts to minimize the outbreak,” the research said.

JP Morgan said it would consider adding individual country scenarios to its model once the infected toll exceeded 100 to 200 in each.

To date, the infection level has exceeded 76,000. INQ