Make room for second liners as PSEi further buckles

The benchmark Philippine Stock Exchange Index (PSEi) still has room to drop after its steep decline last week.

In a note to investors, Eagle Equities head of research Chris Mangun said technical indicators showed the PSEi could fall to 6,800 should the 7,000 level be breached.

The PSEi briefly fell below 7,000 on Friday, eventually closing at 7,063.20, a weekly decline of over 6 percent.

The domestic equities market felt the impact of successive interest rate increases by the Bangko Sentral ng Pilipinas, the weakening peso and worries that a trade war between the United States and China—the world’s two largest economies—would escalate.

“Investors are in panic mode right now, selling off any open positions that they had as they assumed they could hold on while the market corrected,” Mangun said.

“The index could go sideways next week if investors try to scoop issues up while they are cheap. If not, we will continue to see a sell down and test support at lower levels,” he added.

He noted second quarter economic growth and corporate earnings “can potentially be the catalyst for investors to start buying into companies.”

He recommended that investors, for now, avoid blue chip companies and seek good buys among second liners.