Continued market consolidation seen

The stock market is seen to continue consolidating this week as fears over rising coronavirus cases here and abroad capped the recent run-up.

Last week, the main-share Philippine Stock Exchange index (PSEi) shed 175.28 points or 2.75 percent week-on-week to close on Friday at 6,197.38.

The market surrendered previous gains as investors took profit on renewed concerns over the pandemic’s growing impact on the eco­nomy after the government reported daily record surge in COVID-19 cases, said BDO Unibank chief strategist Jona­than Ravelas.

“This could further delay the full reopening of the economy. Added to their worries is the sudden surge in inflation,” Ravelas said.

COVID-19 has so far infected close to 60,000 people in the Philippines.

The week’s PSEi close at 6,197.38 showed the market was having difficulty sustaining the rally but strong support exists at the 6,000 levels, Ravelas said.

“Expect continued consolidation within the 6,000 to 6,500 levels in the near-term. But be on the lookout for a break below 6,000 as it could call for a test of the 5,500 to 5,800 levels,” he said.

PNB Securities president Manuel Lisbona said the broader market was in profit-taking mode last week as investors pocketed gains from the previous week’s rally.

“Market sentiment is still widely dictated by events being reported in connection with the pandemic,” Lisbona said.

From the start of the year to date, he said there had been P70 billion worth of net foreign selling.

“Interestingly, the funds do not appear to be flowing out of the country given the strength of the peso versus US dollar. This is in contrast to 2018, when net foreign selling hit P106 billion and the peso weakened to 54.70:$1,” he said.

On Friday, the peso closed at 49.485 to the dollar. —DORIS DUMLAO-ABADILLA INQ