Market investors cautious; eyes on new strain of virus

Share prices are expected to expected to move sideways this week on narrow range during the last two trading days of the year on concerns about the new COVID-19 virus strain.

The local financial markets will be closed on Wednesday, Thursday and Friday.

Analysts said the seasonal window dressing, which is used by funds to make their financial reports and portfolios look more appealing to clients, will be tempered by worries about the spread of the new virus strain which is feared to be more contagious.

“The pandemic remains to be the single-biggest threat to risk-asset investing currently (even) as… vaccines are being deployed globally,” online brokerage firm 2TradeAsia.com said.

“This supports not only a guarded outlook for full economic reopening plays but also that COVID-19 at the end of the day, remains to be a developing acse, in this regard, market participants may have to brace for extra volatility in the coming weeks,” it added.

Despite the market volatility due to worries on COVID-19, analysts said the earnings recovery could bring local investors back to the equities market and could push the market higher in 2021.

The bellwether Philippine Stock Exchange Index last week declined slipped 0.9 percent to 7,204 on concerns about a possible spike coronavirus cases in the country due to the holiday season.

Except for the property sector which rose by 0.3 percent all, other sector indices ended in the negative led by mining and oil (-2.74 percent), industrials (-2.43 percent) and services (-1.44 percent).

The average value turnover fell to P8.5 billion while the average net foreign selling slowed to P510 million.

Tokyo stocks, meanwhile, ended nominally lower on Friday after thin trade with overseas investors absent over the Christmas holidays.

The benchmark Nikkei 225 index fell 0.04 percent, or 11.74 points, at 26,656.61, for a weekly loss of 0.40 percent.

The broader Topix index edged up 0.23 percent, or 4.14 points, to 1,778.41 for a weekly loss of 0.83 percent.   

“The market was in the state of ‘no selling in quiet times’,” Okasan Online Securities said, referring to a Tokyo market maxim cautioning traders to reject the impulse to dump shares during quiet moments and remain patient until the next opportunity arises.

“The range was so narrow that no one felt shares move,” the brokerage said in a note.

Overnight gains on Wall Street lifted the Tokyo market to open higher. The momentum, however, was short-lived, and investors searched for fresh news in sluggish trade.

Still, bargain hunting prevented a sharp fall of the market.

“The news that Britain and the EU reached a trade deal meant one fewer element of uncertainty, but investors did not see it as a major trading cue,” SMBC Nikko Securities added.

Former prime minister Shinzo Abe faced tough questioning in televised parliament sessions about a scandal involving payments to his supporters, but that did not move the market either. With AFP