Stock market to remain volatile this week - analysts

The local stock market will continue to be volatile this week due to lingering concerns about the US financial crisis, analysts said.

Last week, the main composite index shed 31.02 points, or 1.19 percent, to close at 2,566.21 as investors continued to adopt a wait-and-see stance with respect to taking positions in the stock market.

“Bargain hunters and those that window dressed will turn to profit takers next week as the volatility in the markets favors short term trading,” said Prince Yeung of AB Capital Securities.

Investors are expected to monitor the release of key economic data which include inflation figure and exports for the month of September.

“The expected inflation figure will weigh heavily on the Central Bank’s decision on what to do with interest rates. With the belief that inflation will be tapering off, there are already some calls for the BSP to think about cutting its rates to fuel the economy,” Yeung said.

Yeung said export growth is expected to remain weak as indicated by the lower importation of electronic parts. Electronics constitute a huge chunk of our local export industry with raw materials being imported and put together here.

Dried up credit markets and tight lending policies have slowed down economies all over the world. The lack of funds has threatened to bring the global economy to a screeching halt. Central banks from Japan, France, US, and other countries have moved to address this problem by pumping in billions of dollars in order to provide ample liquidity.

Yeung said investors will continue to take their cue from developments overseas. 

“The $700 billion financial market rescue package is no panacea and will not immediately restore order, it isn’t even sure if it will. Volatility will remain as the package is put to work and its effects keenly awaited. The prudent strategy remains to stay liquid and stay safe,” Yueng said.