Bah humbug! PH stock market not at all feeling Christmassy

This week could prove anticlimactic for investors and traders, especially those hoping for a Santa Claus rally or a pump in share prices toward the end of the year, analysts said.

Their Christmas season game plan: just play the range.

“As a lot of uncertainties remain unanswered, this would be like your Santa Claus rally,” BDO Unibank Inc. chief strategist Jonathan Ravelas told the Inquirer.

The range in question is the 7,000 to 7,300 area. The uncertainties were unknown risks associated with the Omicron coronavirus variant, which has spread to countries globally, including the Philippines, and the US Federal Reserve signalling it would raise interest rates next year to combat rising inflation.

On Friday, the Philippine Stock Exchange index crept higher toward that top of the range, ending up 0.89 percent to 7,297.66.

“We have mixed feelings now. We’re taking the positive impact versus the negative, which is the outlook of probably still-elevated commodity prices and narrowing policy space,” Ravelas said.

“Because of the hike in the US, you are just going to see sideways movements,” he added.

Luis Gerardo Limlingan, managing director at Regina Capital Development, agreed that sideways action could be the best case scenario in the coming weeks.

“The rest of the world has been experiencing choppy trading as a result of record inflation and virus surges,” Limlingan said.

“Thankfully, the Philippines remains in a better position, however, the sentiment could spill over here depending on how severe the cases and cost of goods continue to soar,” he added.

Given the volatility, Ravelas urged traders to enter the market with a defined strategy and to respect the range.

That means accumulating shares during dips toward the bottom while lightening up closer to the top of the range.

“The key word here is to have a plan. It can’t be that you just hold. Have an entry, exit and stop loss,” he said.