Stock exchanges will remain volatile

Trading on the Philippine Stock Exchange is expected to remain volatile as the index edges closer to the bear market amid lingering fears over a slowing economy, rising inflation and tighter interest rates.

Analysts said the depreciation of the peso against the U.S. dollar and rising COVID-19 cases in the country were contributing to investor concerns.

“The week’s close at 6,331.56 signals that the bears are under control. Further decline towards the 6,000-6,300 levels is likely in the near term,” said BDO Unibank Inc Chief Investment Strategist. ., Jonathan Ravelas.

The benchmark of the Philippine Stock Exchange will enter the bear market once it drops to 6,041.76.

A bear market condition occurs when a stock index declines 20% or more from recent highs over an extended period of time due to pessimism and negative investor sentiment.

Last week, the US S&P 500 index entered bearish territory as inflation fears continued to mount.

Analysts, however, said the recent market decline could present investors with an opportunity to hunt for bargains, as many stocks have fallen significantly from recent highs.

The PSEi plunged 3.04% last week to close at 6,331.56, while the broader all-stock index fell 3.33% to 3,394.95. All sub-indices ended in the red, with services down 4.34%; holding companies, 3.98%; industrial, 3.22%; property, 2.55%; mining and oil, 2.3%; and financial services, 1.24%.

Foreign investors turned into net sellers last week of P3.6 billion. The average daily trade value reached P7.86 billion, up from the previous week’s average of P5.5 billion.

The top gainers last week were Emperador Inc. which advanced 5.3 percent to P17.90; Semirara Mining and Power Corp., which gained 4.7% to 35.70 PPP; and Bank of the Philippine Islands which rose 2.4% to 94.80 pesos.

Big losers included Wilcon Depot Inc., which fell 15.3% to 23.30P; Converge Information and Communications Technology Solutions Inc., which fell 13.5% to 20.15P; and Megaworld Corp., which lost 13.1% to P2.26.

Global stock markets faltered and oil prices fell on Friday amid growing fears that inflation-fighting interest rate hikes by central banks could trigger a recession.

Investors were reeling last week after the US Federal Reserve unleashed its biggest hike in borrowing costs in nearly 30 years to combat soaring consumer prices.

The Fed’s third hike was followed by the Bank of England’s fifth consecutive hike and the first in 15 years by the Swiss central bank, underscoring growing global concerns about inflation.

The moves prompted a global selloff on Thursday. US and European markets tried to stage a rebound on Friday, but some indices were back in the red later in the day. With AFP

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