Stocks are expected to move sideways with a downward bias this week, on heightened volatility after Britain voted to leave the European Union, analysts said over the weekend.
“While the exit of Britain from the EU is likely to have a minimal impact on Philippine economy, volatility in trading is expected as investors digest what this move really means in each sector,” online brokerage firm 2TradeAsia.com said.
Philippine Stock Exchange president and chief executive Hans Sicat said the outcome of the British referendum would have a negative impact on various asset classes and currencies including the Philippine market.
“This was the foreseen reaction in a ‘Brexit’ case which may prevail for the next few days as markets settle. Medium term, however, we think that the Philippine market will not be adversely affected as it is supported by the country’s solid economic fundamentals and the inherent strength of the local financial market,” Sicat said.
Analysts said given the increased volatility, the stock market index was expected to retrace the 7,500-point level.
“The recent test at the 7,800 levels in the near-term signals the market’s inability to sustain itself above said levels. Market players may re-enter the market near the 7,500 levels. However, should 7,500 levels give way, it may lead to a much larger correction towards the 7,000 to 7,350 levels in the near-term,” BBO Unibank Inc. chief investment strategist Jonathan Ravelas said.
The Philippine Stock Exchange index, the 30-company benchmark, eked out a 0.10-percent gain last week to close at 7,629.72 despite a 100-point drop on June 24, after the United Kingdom voted to withdraw from the European Union.
Among the sub-indeces, mining and oil suffered the steepest decline of 8.5 percent last week, with the appointment of anti-mining advocate Regina Lopez as secretary of the Environment Department.
Foreign investors remained net buyers last week by P4.3 billion. Top gainers were First Gen Corp. which went up by 10.2 percent to P24.40 and First Philippine Holdings Corp. which advanced 4.5 percent to P66.95. Both companies are controlled by the Lopez family. Globe Telecom also rose 3.3 percent to P2,360.
Heavy losers last week were Philex Mining Corp. which fell 10.5 percent to P8.24, Semirara Mining and Power Corp. which dipped 9.3 percent to P117 and Altas Consolidated Mining and Development Corp. which declined 7.2 percent to P4.25.