Local stocks remain at the 7,700 to 7,900 support level amid overseas geopolitical tensions, now paired with domestic jitters due to the Taal volcano’s eruption, which cut trading days this week.
Still, the main index has to break above the 8,000 to 8,200 level in the next few weeks to trigger a rally, head of research for AAA Equities Christopher Mangun said, adding that there are signs that such could happen.
Mangun said volatility brought by tensions of a possible war between the United States and Iran, which has recently been chipping at investor confidence, slightly dissipated last week with United States president Donald Trump restraining from retaliation against Iran after recent bombings. The US opted instead to impose sanctions on Iran’s metal exports.
Analysts say this, in addition to the expected signing of the first phase of the trade deal between US and China sometime in January, could lift investors’ spirits up.
Mangun said that the Philippine Stock Exchange index (PSEi) is ripe for a rally, “otherwise, we may continue to see it trade within this range of 7,700 and 7,920 with investors on the sidelines waiting for something to happen.”
“We do not want to see a replay of last year as more and more investors will lose interest and ignore our market,” he added in a weekly note. He said monetary policy has been modeled to spur economic growth with accommodating interest rates, complemented by ongoing infrastructure projects and slower inflation, adding optimism that stock market growth could follow.
As of Monday, the PSEi is still down 0.27 percent, or 20.87 points, to 7,776.77 as bourse operator PSE cancels trading for the day in light of the hazardous volcanic ash emission from the Taal volcano. The all shares index was down 0.17 percent to 4,605.17, with all sub-indices except for the financials index finishing in red.
Turnover value stood at P28.12 billion, with foreign investors still fleeing the market with a net-selling footprint of P1.24 billion for the week, although net inflows registered at P465 million on Friday.
Senior research analyst for Philstocks Financials Inc. Japhet Luis Tantiangco said there could be room for investors to bargain hunt this week considering that the main index is down 0.8 percent week on week as of last Friday.
“With the Taal volcano activity so far we’re not seeing much casualties yet. In the event however that the activity intensifies into an explosive eruption, there will be damages on the economy which in turn would be negative for the market,” Tantiangco said.
Head of sales for Regina Capital Development Corp., Luis Limlingan, echoed the sentiment, saying that it is “too early” to assess the effects of the Taal activity on the market, and that a one-day disruption in business operations “wouldn’t deter investors.”