Market likely to remain sluggish this week

MANILA, Philippines - The local stock market is likely to remain sluggish this week as investors seek direction from developments overseas.

Last week, the main composite index shed 46.1 points or 1.86 percent to close at 2,431.34 on thin trading. Value turnover failed to reach P10 billion for the first time since the end of April, indicating that investors have turned cautious amid uncertainties on the local as well as international front.

“For now, the bias for the PSEi is to move flat to lower. Economic fundamentals are still lagging behind and there are too many concerns for the local stock market to make another rally. It seems that investors will continue to move cautiously,” said Prince Yeung of AB Capital Securities.

The first half of the year saw the PSEi rising over 200 points. But analysts doubt whether the market can sustain this growth for the rest of the year given nagging economic and political issues.

“The optimism that fueled the rally has been pared down. Good news from abroad has lessened and are starting to be outnumbered by bad news like the recent jobs data. Investors have finally realized that the economic fundamentals do not support current price levels and are selling albeit very slowly. While the PSEi has been tame in terms of movement, volatility might eventually pick up,” Yeung said.

The US economy lost 467,000 jobs in June, fuelling concerns that a recovery may take a while even as the unemployment rate spiked to a 26-year high of 9.5 percent.