The local stock market is seen to trade with caution this week ahead of a long Lenten holiday break as rising domestic COVID-19 cases continue to spook investors.
Last week, the main-share Philippine Stock Exchange index (PSEi) added 108.53 points or 1.7 percent to close at 6,544.63.With just three trading days due to the Lenten season, Papa Securities chief strategist Manny Cruz said he was expecting the market to be apprehensive this week amid record COVID cases that overwhelm hospital facilities and trigger tighter lockdown measures.
Cruz said trading range for the PSEi would be within the 6,300 to 6,700 level.
BDO chief strategist Jonathan Ravelas said last week’s closing at 6,544.63 signaled that the market could test the 6,000 to 6,300 support levels in the near term. Any rebound will likely be limited to 6,700, he added. The backdrop of rising COVID-19 cases has become a major overhang for the market.
“We’ve reiterated that the public heath and economic crises are intertwined and that solving the economic woes would mean beating down the virus first and foremost as it would help bolster sagging consumer confidence. A year into the twin crises, the Philippines is faced with a resurgence in cases with the economic trajectory headed in the wrong direction,” said Nicholas Mapa, economist at ING Philippines. Mapa said the Philippines had largely escaped any unfavorable credit ratings agencies action during the pandemic amid the government’s fiscal prudence strategy. “However, the lone reason for retaining the Philippines at its current credit rating was the economy’s above average medium term GDP (gross domestic product) growth trajectory,” which by all accounts is lacking now. As the world recovers and receives the vaccines, the Philippines is in danger of being left behind by developed and emerging markets alike both in public health and economic matters,” Mapa said. “A prolonged downturn could force a negative outlook revision or an outright downgrade if the Philippines remains on this track,” he added.
With the economy reeling and cases on the uptrend, the economist said the Philippines was in dire need of a shot in the arm, both for the economy and for public health. “Securing vaccines that the public can trust will go a long way in reviving consumer sentiment while a new punchy fiscal stimulus plan a la the [US President] Joe Biden rescue plan can jump-start the stalled economy,” Mapa said. INQ