MANILA, Philippines — The recovery of the stock market has lost steam amid growing concerns over the slowdown in global economic growth, traders said.
Cristina Ulang, vice president at First Metro Investment Corp., said the corporate earnings results released the past weeks have not been enough to entice investors to return to the market.
”The market recovery has lost steam and will likely be range-bound this week given the global growth slowdown worries and lack of catalysts as the corporate earnings session unwind with results failing to excite,” she said.
Last week, market barometer Philippine Stock Exchange index rose 2.03 percent week-on-week to 7,797.11 as investors took advantage of low prices to accumulate stocks from the previous week’s fall.
The lower February inflation print and prospects of some monetary easing in the coming months helped lift the market from the week’s low of 7,595.92, said Jonathan Ravelas, market strategist at BDO.
Inflation slowed to 3.8 percent in February from 4.4 percent in January.
For this week, Ravelas said “the week’s close at 7,797.11 highlights some support exists near 7,500 levels.”
“Look for test of the 7,950 to 8,000 level in the near-term. Failure to test the said level could signal a retest of the 7,500 level” Ravelas said.
Christopher Mangun of Eagle Equities, however, noted that the low trading volumes suggest that investors are still not convinced of the rally and are still sitting on the sidelines waiting.
“Foreign investors also took some money off the table with foreign net-selling last week at P301.3 million,” he said.
For this week, Mangun said that thin trading volumes could still suggest sideways trading between 7,600 and 7,900 in the coming weeks.
“This may be attributed to the fact that the general investor sentiment is cautious as is all over the world over concerns on the US-China trade deal and worries over the slowdown in global growth,” he said.
At the same time, he noted that global factors aside, Philippine economic fundamentals continue to improve.
“Decreasing inflation and stronger corporate earnings growth will improve market sentiment in the longer-term. If inflation stays below four percent in the coming months, we may see the BSP cut interest rates which will be a major catalyst for the equities market,” Mangun said.