Market seen sideways

MANILA, Philippines - Coming from last week’s meltdown, the local stock market is seen to trade sideways in another holiday shortened trading week.

Investor confidence has yet to return given turmoil in financial markets overseas but a surprising second quarter economic growth might dispel gloomy sentiments, analysts said.

“Chartwise, the index tested the 6,000 level and fell below the 200-day moving average,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

A fall below the 6,000 level might signal further losses toward the 5,650-5,800 levels, Ravelas said.

“We will continue to track sentiments overseas. Jitters are still there because of the US Federal Reserve,” said Astro del Castillo, managing director of First Grade Finance Inc.

For Justino Calaycay Jr., analyst at Accord Capital Equities Corp., “the market is generally seen to keep a sideways direction with a slow, almost indiscernible shift in bias to positive as bargain hunters and long horizon portfolios take advantage of the overriding pessimism.”

Any rebound will be limited to the 6,250-6,350 levels, Ravelas said.

Week-on-week, the Philippine Stock Exchange index retreated 5.58 percent or 364.74 points to 6,161.21 in a trading week that was cut to just two days given suspensions from torrential rains and a holiday.

The local market slumped late last week as it played catch up to the capital flight in Asia’s emerging economies.

For this week, investors will also monitor the release of second quarter Philippine gross domestic product (GDP) data.

Financial markets are closed today in observance of the National Heroes’ Day.

“That could be a game changer especially if there is another surprise,” Del Castillo said.

In the first quarter, the economy surged by a surprising 7.8 percent, the fastest in Asia, driven by construction and manufacturing industries.

However, Calaycay said that “restoring confidence on equities has been a difficult challenge as investors remain enamored with concerns over the US Fed’s decision on the future of quantitative easing.”

Liquidity in financial markets is expected to normalize when the US Fed tempers its $85-billion bond buying program.

It will take time before market finds balance amid the volatilities, Del Castillo said.