Risk aversion is expected to overcome investors this week amid doubts over the sustainability of the US recovery and the growing debt crisis in Europe.
The benchmark Philippine Stock Exchange index (PSEi) returned to the 5,000-level last week following news that the country’s economy grew faster in the first quarter, beating most analysts’ expectations.
The index closed at 5,062.44 on Friday, down 30 points from the previous trading session but up 2.77 percent week on week, despite sharp declines seen in the rest of Asia.
Investor confidence was also boosted by Moody’s Investor Service’s revision of its credit rating outlook for the Philippines to “positive” from “stable,” reflecting the country’s improved economic fundamentals.
A local brokerage, however, said continued bad news from abroad might dampen the positive sentiment for the coming week.
“Sustained doubts on the momentum of the US economic recovery, coupled with the still unresolved and apparently growing crisis in Europe, the positive spin impelled by surprisingly strong domestic economic numbers in the home front may be muted,” Accord Capital analyst Jun Calaycay said in a note to clients.
Gaming stocks, in particular, may face an uphill climb this week after reports showed that Macau, Asia’s casino “haven,” posted its slowest revenue growth since the financial crisis—indicating a slowdown in the region’s appetite for gambling.
Calaycay said support for the local index was still at the 4,930-4,940 level.—Paolo G. Montecillo