PHL shares to continue decline on consolidation

Font Size

By Arra B. Francia, Reporter

LOCAL STOCKS are seen to continue falling in the week ahead before the main index can establish momentum to propel it back to the 9,000 level.

PHL shares to continue decline on consolidationThe 30-member Philippine Stock Exchange index (PSEi)plunged 1.63% or 141.39 points to close at 8,503.69 on Friday, tracking the movement of international counterparts which already lost over 2,000 points last week.

On a weekly basis, the local stock barometer fell by 307.06 points, with all sectors posting negative finishes. Foreigners preferred to move their funds out of the country, as net outflows averaged to P940 million, although lower than the P1.35 billion recorded the week before. 

“I will not be surprised if we lose another 200 points [this] week, however, I am also confident that if we do, we will see it hold our major support at 8,300,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a report.

With economic fundamentals still unchanged, Summit Securities, Inc. President Harry G. Liu said the market could rally in the following weeks.

“(The market’s decline) is not caused by any immediate crisis… I expect the market to rally very soon,” Mr. Liu said by phone last Friday.

The Bangko Sentral ng Pilipinas chose to keep rates steady during their first policy meeting last Thursday, although raising its inflation forecast in 2018 to 4.3% in anticipation of price increases mandated under the Tax Reform for Acceleration and Inclusion program.

“Inflation (as a gauge for growth) is good, so long as propelled by improved employment, which should trickle in as more infra projects are rolled out,” online brokerage said in a weekly market note. 

The brokerage added that liquidity is intact, as companies tap the capital market to raise funds. Included in the lineup of firms set to conduct fund-raising activities in the February to March period are Metropolitan Bank & Trust Co., Bank of the Philippine Islands, Robinsons Land Corp., Integrated Micro-Electronics, Inc., and the Philippine Stock Exchange, Inc. 

“Given this, it is normal to see liquidation considering share prices have breached an attractive zone where cash outs are the usual reaction,” according to 

Eagle Equities’ Mr. Mangun also noted that should the market bounce back to the 9,000 level, this trend is called the bear trap. 

“This is beneficial for our market as more of the “weak hands” will be shaken out. A bear trap is a false signal that the rising trend of a stock or index has reversed when it has not.” placed the market’s immediate support at 8,400 this week, while resistance will play within the 8,600 to 8,650 range.