Share prices are expected to remain sideways this week as investors could turn cautious on negative developments abroad following the US air strike that killed an Iranian general.
Analysts said concerns about possible retaliation from Iran against the US and the negative effects of the incident could prompt investors to reduce risk or stay on the sidelines.
Following the US air strike, international oil prices surged to their highest level since April to $70 per barrel on fears the conflict between the two countries would disrupt energy production in the region.
In the domestic front, Philstocks Inc. research head Justino Calaycay said investors would attempt to make sense of the regulatory issues surrounding water concessionaires and media giant ABS-CBN Corp.
“The direct impact of this on the involved companies is quite obvious—both in terms of share price and their fundamental prospects. However, the fallout, should the worst happen, could create a spiral, both in sentiments and in the real economy, that may be difficult to overcome,” Calaycay said.
The Philippine Stock Exchange Index rose 0.3 percent to close at 7,839.79 during during the first two trading days of the year, while the broader All Shares Index climbed 0.1 percent to 4,655.54.
Four of the six sectoral indices ended in the green, led by services (+1.1 percent), holding firms (+0.5 percent) and industrial (+0.5 percent and property (+0.46 percent).
The financial index declined 1 percent while the mining and oil sector dipped 0.9 percent.
Foreign investors continue to exit the local stock market, as they were net sellers by P1 billion.
The average daily value traded remain thin at P5 billion from the previous week’s average of P6.1 billion.
Weekly top price gainers were Fruitas Holdings Inc., which rose 13.2 percent to P1.37; AC Energy Philippines Inc., which advanced 9.4 percent to P2.44; and Petron Corp., which climbed 8.3 percent to P4.18.
Weekly top price losers were Manila Water Co Inc., which declined 11 percent to P9.22; PAL Holdings Inc., which dropped 8.1 percent to P7.21; and First Gen Corp., which fell 4.7 percent to P23.
World oil prices, meanwhile, jumped on Friday after the US killed a top Iranian general, fanning fresh fears of conflict in the crude-rich Middle East, with Tehran warning of “severe” retaliation.
While global stock markets were mixed following the US killing of Qasem Soleimani, oil prices jumped more than three percent.
In Washington, a Pentagon official said the US would deploy at least 3,000 additional troops to the Middle East as Iran’s supreme leader Ayatollah Ali Khamenei promised “severe revenge” for the death of the military mastermind.
The killing of Soleimani represents “a significant spike in geopolitical risks and could lead to a direct confrontation between the US and Iran,” Oxford Economics said in a commentary.
“The importance stems less from the potential loss of Iranian oil supplies… and more from the risk that this could spark a broader conflict that draws in Iraq, Saudi Arabia and others,” Cailin Birch, global economist at The Economist Intelligence Unit told AFP. With AFP