Trading at the Philippine Stock Exchange is expected to remain volatile this week due to concerns on rising inflation and an increase in interest rates in the country.
First Metro Investments Corp expects the downward momentum to remain in the interim, with the market still trading below its moving averages.
“Trend followers are recommended to wait for a breakout above its downtrend line with a big volume before buying,” First Metro said.
With the inflation rate rising,
investors are getting worried the domestic economy is overheating and that it may not be able to sustain a 6-percent to 7-percent growth.
Investors have also expressed concerns about the planned second package of tax reform that focuses on the reduction in fiscal incentives and fresh tax hikes on businesses.
Online brokerage firm 2TradeAsia.com, however, said the current market downward trend could present buying opportunity for equity investors.
“The reality is there are people who prevail in these trying times versus those who are quick to throw the towel. This phenomenon explains volatility that presents buying windows,” 2TradeAsia.com said.
The 30 company-Philippine Stock Exchange Index last week declined 2.2 percent to 7,726.72 on volatile trading that saw the index hitting a low of 7,537 points. The broader All Shares Index dropped 2.2 percent to 4,687.29.
All major counters ended in red led by mining and oil (-4.35 percent), services (-4.06 percent), holding firms (-3.26 percent) and financials (-1.66 percent).
Foreign investors were net sellers by P2.9 billion, while the average daily trading value stood at P7.5 billion.
Weekly top price gainers were Megawide Construction Corp., which rose 10.9 percent to P23.85; Aboitiz Power Corp., which advanced 5.6 percent to P39.70; and Ayala Land Inc., which climbed 3 percent to P41.10.
Weekly top price losers were led by GMA Network Inc., which dipped 10.9 percent to P5.69 ; Puregold Price Club Inc., which declined 9 percent to P48; and East West Banking Coro., which fell 8.9 percent to P17.
Wall Street stocks, meanwhile, finished last week on a downcast note, falling Friday on worries about higher interest rates and tech giant Apple’s prospects.
The Dow Jones Industrial Average dropped 0.8 percent to close the week at 24,462.94.
The broad-based S&P 500 shed 0.9 percent to end at 2,670.14, while the Nasdaq Composite Index tumbled 1.3 percent to 7,146.13 following a big decline in Apple, the biggest company by market capitalization.
The yield on the 10-year US Treasury rose ever closer to 3.0 percent, jumping 1.3 points to 2.95 percent, reigniting fears that Federal Reserve interest rate increases will dent the economy.
Investor unrest is due partly to uncertainty about how the US central bank might navigate the transition under a new leadership team following the replacement of Janet Yellen with new Chair Jerome Powell, said Maris Ogg of Tower Bridge Advisors. With AFP