Stocks seen recovering after massive selloff

MANILA, Philippines - The local stock market is seen sustaining its rally with the start of the ‘ber’ months after the massive selloff seen last Monday.

Analysts expect the market to continue its recovery this week

The index is expected to continue its rally this week and test resistance levels at 7,100 to 7,270, said Luis Limlingan, managing director at Regina Capital.

 “Keeping in mind that the recent breakdown put a lot of selling pressure and together with high volatility readings, taking a very cautious approach is advised during this week’s trade,” Limlingan said.

Investment analyst Jason Escartin of F. Yap Securities said moving forward, there are opportunities that may arise from the consumer sector.

“As the country drives into the “ber” months, opportunities in the consumer sector may merit a closer look.  With household consumption comprising 2/3 of the local economy, the seasonal uptick may bode well for consumer-related shares,” Escartin said.

The benchmark Philippine Stock Exchange index (PSEi) declined 180 points to close at 7,098. This was 2.48 percent lower week-on-week.

All sectors led by services declined by 6.26 percent, while the property dropped 2.92 percent and the financials sector declined by 2.24 percent.

Nevertheless, gainers edged out losers, 93 to 89 and participation surged to P10.99 billion or up by 96.8 percent as foreigners rushed toward the exits, resulting in average net foreign selling of P2.24 billion.

The month has seen its deepest foreign selloff for the year with P17.65 billion, he noted.

Analysts said the Jackson Hole conference this coming weekend in Wyoming is seen to provide critical cues for world markets.

“Specifically, players will be listening closely to the views of US Fed vice chairman Stanley Fischer on Saturday.  The key question in the minds of players is whether the Fed would start its rate liftoff this September, given the drastic devaluation of the yuan and perceived slowdown of China’s economy, in relation to US inflation and labor market conditions – the two critical factors behind the rate hike,” Escartin said.

Traders are hoping glitches at the stock market have finally come to an end even as the PSE assured the problem has been addressed.

“The PSE has put in place fixes to the technical issues it encountered and we have seen trading operating normally. Rest assured, the Exchange continues to monitor the situation,” said PSE chief operating officer Roel Refran said.

The market saw disruptions last Aug. 18, 24 and 25.

The Securities and Exchange Commission, (SEC) has asked information from the PSE on the technical incidents.

“We observe reporting procedures when these types of issues arise, including providing them incident reports as soon as possible.  We have been in constant communication with the SEC and will provide them their information requests within the set timelines,” Refran said.