Volatile trading is expected continue this week amid escalating tension in the Middle East, as investors are expected to remain on the sidelines due to lingering concerns.
Philstocks Financial Inc. said bearish sentiment will likely continue over the near term period even as market is currently undervalued.
“Fundamentals-wise, the local market is still deemed undervalued, closing the week with a PE (price-to-earnings) ratio of 11.4x. This is below its 5-year historical average of 17.3x and the regional average of 16.1x,” Philstocks research head Japhet Tantiangco said.
“Sentiment next week could remain bearish however due to the ongoing Israel – Iran conflict. If the said conflict continues to push oil prices higher and cause the Peso to depreciate further, then these may pull the local market lower. A further escalation of the said conflict is also expected to be a significant headwind for the local bourse,” he said.
Investors are concerned about the continued rise in oil prices which could push inflation rate higher.
Last week, the bellwether Philippine Stock Exchange index fell 0.87 percent to close at 6,339.77 while the broader all shares index dropped 0.65 percent to 3,760.56.
Average value turnover reached P7.86 billion.
Foreign investors were net sellers for the week with outflows reaching P3.49 billion.
