The local stock market is expected to follow the downward trend set by Wall St. as fears mount over the perilous state of the global financial system.
Analysts say stock market sentiment remains weak as investors are worried that giant financial bailouts by governments around the world have failed to halt a downward spiral in global markets.
Last week, the main composite index gained 4.78 points or 0.25 percent to close at 1,893.74. Concerns over the future of the US automobile industry capped the market’s gains, leading to a weak finish.
“Ending on a sell-off, the local stock market is poised to continue moving downward at the start of next week,” said AB Capital Securities Inc.’s Prince Anthony A. Yeung.
Yeung said investors’ attention has now shifted to the future of the Philippine economy with only a few weeks to go before the year ends.
Most investors have seemingly focused on next year as opposed to how to end the year. Investors are now planning their actions for next year by looking at how the local economy will fair,” Yeung said.
Yeung said while the economy showed resilience in the third quarter, next year is expected to a tougher year for the business community.
He noted that the labor situation in the US remains on top of the list of concerns by investors given increasing layoffs in the past months. The figure can accelerate further if the automobile industry is not bailed out. It is estimated that up to one million jobs would be lost if General Motors and Chrysler are allowed to fail.
Congress has passed the $14-billion bailout package for automobile manufacturers in the US but the package was rejected by the Senate.
In November alone, the US economy lost over 500,000 jobs, bringing the year-to-date total of jobs lost to slightly below two million.
Yeung said while stocks may have reached oversold levels, it is not yet time to reinvest in the stockmarket.