Market seen to remain volatile this week

The local stock market will remain volatile this week as traders though tempted by attractively low share valuations are still skittish on signs of further weakening of the US economy and renewed political concerns.

Francisco Liboro, president of the Association of Securities Analysts of the Philippines, said share prices will likely continue a declining trend in the near term due to lingering concerns over a US credit squeeze.

“The market’s weekly moving averages are in negative crossover territory so we will see more downtrends in the next three to six months,” Liboro said.

Liboro said once the market reaches oversold levels of between 2,800 and 2,650, investors are expected to resume their buying activities.

Last week, the main composite index fell 52.95 points or 1.61 percent to 3,241.13 due to the revelations of Rodolfo Noel Lozada Jr., a new witness to the Senate probe on the botched $329- million national broadband network deal with China’s ZTE Corp.

Lozada implicated former elections chief Benjamin Abalos Jr. and First Gentleman Jose Miguel T. Arroyo in this scandal which exploded last year.

Aside from all these, the stock market is under pressure from a rising trend in inflation.

“Long-term investors will need to remain patient as it’s going to take some time before we know if we’ve reached a bottom. The market will have a bottom despite the deteriorating economic conditions. The market has largely priced in the possibility of a recession and this has resulted cheap prices for some quality blue chips,” AB Capital Securities said.