Bearish mood seen this week

MANILA, Philippines - Bearish market sentiments will likely prevail this week on continued concerns over the US Federal Reserve’s plan to taper off its massive bond buying program.

Share prices will trade sideways with a negative bias as investors focus on worries and largely ignore corporate earnings, analysts said.

“Chartwise, the index traded below the 10, 32 and 65-day moving averages, highlighting that the bears are in control,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

Ravelas said the main index is seen to test the 6,350 support level but further declines might lead further losses toward the 5,800-6,000 levels.

“Nothing much will change this week despite the good news like low inflation and good corporate earnings. We will see the market sideways,” Astro del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

Week-on-week, the Philippine Stock Exchange index slipped 1.98 percent or 129.72 points to end at 6,404.23 in a shortened trading week. Financial markets were closed on Friday due to the Eid al-Fitr holiday that marks the end of the Ramadan.

With the start of the traditional Chinese ghost month, investors refused to make major investment decisions.

Hence, total value turnover amounted to just P20.1 billion last week from P40.4 billion a week ago.

For this week, concerns over the easing of the stimulus program, which brought much liquidity to financial markets, will take center stage.

“Local investors have been challenged to move against the strong headwinds from abroad, particularly the gnawing fear of reduced bond purchases by the US Fed,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

“Positive economic data in the US has led investors to speculate that the tapering of the quantitative easing will soon begin,” Ravelas said.

For Calaycay, investors are staying on the sidelines, holding on to cash and waiting for major leads before committing again to stocks given numerous uncertainties.

“Smart money has obviously taken a step back to take an objective measure of the situation. Retail investors are well advised to do the same,” Calaycay said.