Further decline in market expected this week

MANILA, Philippines - The local stock market failed to impress on its first trading week of the year behind market turmoil in China and may be bound for further corrections this week.

Analysts said deep sell-offs in the local market should persist in the next five trading days unless investors get something to cheer about either locally or abroad.

“With major support breached, the Philippine Stock Exchange index (PSEi) is expected to lead declines to as low as 6,300 this week. This level could be a possible rebound area since we project prices to form its channel support there,” Regina Capital Development Corp. managing director Luis Limlingan said.

The PSEi concluded last week 0.66 percent or 43.45 points lower from Thursday’s trading at 6,575.43. Week-on-week, the benchmark index was down 5.42 percent.

Value turnover average improved 15 percent at P4.41 billion with foreigners as net sellers at P128 million.

Last week’s sluggish trading was caused primarily by the escalating concerns on China that was further aggravated by geopolitical tensions such as North Korea’s reported nuclear testing and Saudi Arabia and some Gulf allies falling out with Iran.

While expectations of a general downtrend will welcome the trading week, analysts see some chances of a recovery for the market should investors take advantage of bargain stocks.

“With local gauges at its critical juncture at 6,500, we expect participants to have their fingers on the trigger, ready to seize opportunities to score bargains,” F. Yap Securities research head Grace Cerdenia said.

For Limlingan, the index may still be able to prevent a bearish scenario should prices recover above 6,600 to 6,700 levels and hold above it.

Immediate support has been placed at 6,450 to 6,500, while resistance is between 6,650 and 6,700.