Ghost month, ECQ to spook stock trades

MANILA, Philippines — The start of the so-called ‘ghost month’ and another round of hard lockdown to commence later in the week are two compelling reasons investors would likely stay away from the stock market for now.

Last week, stocks came crashing down following the government’s announcement of a fresh two-week enhanced community quarantine (ECQ) to start on Aug.6.

Michael Ricafort, chief economist at  Rizal Commercial Banking Corp., said the Philippine Stock Exchange index (PSEi) would test the immediate 6,100 support level and could further break into the 6,000 level.

The last time the main index flirted with the 6,000 support was on May 14 when it closed at 6,080.94.

Immediate minor resistance levels, on the other hand, are seen ranging from 6,450 to 6,570, he noted.

The PSEi finished lower for the fourth straight week last Friday, plunging a hefty 3.8 percent or 250.51 points to 6,270.23.

Since the start of 2021, the PSEi has lost 12.2 percent from 7,139.71 in end-2020.

Last month, the PSEi eased by 9.1 percent to snap a two-month uptrend at 4.1 percent and four percent in June and May, respectively.

The upcoming two-week ECQ in the National Capital Region (NCR) is scheduled from Aug. 6 to 20 in an effort to prevent the spread of the more contagious COVID-19 Delta variant.

This could again slow down business and economic activities, Ricafort said.

Japhet Tantiangco, an analyst at PhilStocks Financial Inc., said the local market is still seen to move with a downward bias this week as investors price in the economic losses brought by the tightening of restrictions in the NCR.

He said that another round of ECQ would further limit both household consumption and business activities in the NCR, the biggest contributor to GDP.

“This in turn is expected to lead to more economic repercussions, including jobs and income losses, as well as a decline in business and consumer confidence,” he said.

Moving forward, investors are also expected to monitor the daily COVID-19 case counts.

More Delta cases would aggravate pessimism, he said.

On the corporate scene, investors are also expected to watch out for second quarter corporate reports as well the July inflation rate.