Share prices to rebound this week, says analyst

MANILA, Philippines - Share prices are expected to rebound this week after being battered by heavy foreign selling.

Investors will look for companies’ fundamentals as the selldown opened opportunities to enter the market anew, an analyst said.

“The rebound should continue into week 24 (of the year), with investors refocusing on firm fundamentals, particularly hunting for bargains that have opened up,” said Justino Calaycay Jr., analyst at Accord Capital Securities.

“Markets appear to have awakened from the doldrums of the last couple of weeks,” he said.

The Philippine Stock Exchange index (PSEi) slumped 4.55 percent or 320 points to settle at 6,701.95 compared with 7,021.95 a week ago. The correction was sharp that the bellwether index hit a low of 6,393.56 in the morning session of June 6.

“The last two trading days put a stop to the general downtrend that persisted since May 23,” said brokerage firm RCBC Securities Inc.

“Spooked by a sudden reversal in global equity markets on speculations the US Federal Reserve was poised to scale back stimulus, investors dumped shares like a hot potato sending the PSEi 6.6 percent lower at midweek,” Calaycay said.

The selldown on shares of property giant Ayala Land Inc. (ALI), which stemmed from an explosion at unit 501 of Two Serendra condominium project in Taguig, also dragged the market.

For this week, Calaycay said the worries created by speculations on the US Fed’s rollback of the bond buying program are seen to fade.

“More objectivity can creep back into the decision making process,” Calaycay said.

For Jonathan Ravelas, chief market strategist of BDO Unibank Inc., the market is seen to trade in a sideways/down pattern “between the 6,400-6,850 levels in the week ahead.”

Local fundamentals are still strong, validated by the surprising 7.8-percent growth in first quarter gross domestic product, Calaycay said.

“Most, if not all of the risks, were presented by developments outside our borders. Through those times, the market may have lost its footing but the overall economy continues on its growth trajectory,” Calaycay said.