MANILA, Philippines - The local stock market is most likely to continue its downward turn this week on concerns over slowing growth in the US.
Last week, the main composite index closed at 3,469.52, down 1.33 percent from the previous week as investors took profits amid renewed worries about the weakness in global economies.
“The coming week may be another challenge for the index. Outside pressure is quite strong and affects the sentiment of the investors. Although earnings are impressive for some companies, negative developments in the US drag the PSEi to a sluggish pace. As global worries continue to be a thorn on markets, we may not yet see a firm and convincing run up in the market,” said Maria Arlysa E. Narciso of AB Capital Securities Inc.
“The point is despite all positive news coming out for the Philippines and the firms, the local market is still to remain mum and tread sideways in cautiousness and wait for strong leads outside,” Narciso said.
Narciso remains bullish on the local economy due to improving manufacturing activity. The government, however, is under pressure to cut a ballooning budget deficit.
Among the stocks that took centerstage last week were EDC which gained 5.3 percent to close at P4.57 each share last Friday and AGI which finished at P6.20 each share.
With the weakening of US and European economies, more funds are reallocating a greater portion of their portfolio in fast-growing Asia. The Philippines, which held well through the recent global credit crisis, is getting the better share of those inflows.
Goldman Sachs included the Philippines in its “Next Eleven” (or N-11) list of countries - identified as having promising outlooks for investment and future growth.
The N-11 (which includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines and South Korea) is a follow-up to their 2003 paper on the BRIC economies (composed of Brazil, Russia, India and China). Goldman Sachs used macroeconomic stability, political maturity, openness of trade and investment policies, and the quality of education as criteria for selection.