PHILIPPINE STOCKS may continue to decline this week as corruption concerns continue to weigh on market sentiment.
On Friday, the Philippine Stock Exchange index (PSEi) dropped by 0.25% or 15.16 points to close at a near six-month low of 6,027.12, while the broader all shares index decreased by 0.23% or 8.7 points to 3,644.80.
Week on week, the PSEi also fell by 237.37 points from its 6,264.49 close on Sept. 19 as it posted losses for five straight sessions.
“Following the prior week’s gain, the local bourse pulled back this week on lingering political uncertainties over investigations in flood control projects,” online brokerage 2TradeAsia.com said in a market report on Friday.
“The local market is still moving with a bearish bias, forming a new low and even visiting the below 6,000 territory last week. Corruption issues over the Philippines’ flood control projects and the peso’s weakening position against the US dollar continue to weigh on the bourse,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
The Justice department said on Friday that the National Bureau of Investigation (NBI) has recommended the prosecution of 21 individuals, including several lawmakers and officials of the Department of Public Works and Highways, over their alleged involvement in anomalous infrastructure projects.
Meanwhile, on Friday, the peso closed unchanged at P58.10 per dollar due to these corruption issues and reduced expectations of further US Federal Reserve rate cuts amid strong economic data.
For this week, Mr. Tantiangco said there could be some bargain hunting following the PSEi’s five-day slide.
“A strong rally is not yet expected, however, until the market finds a strong positive catalyst. Investors are also expected to continue dealing with the corruption issues of the country’s flood control projects,” he said. “Investors may also take cues from the movement of other relevant markets. The peso’s direction may still play a significant role in the market’s movement, with further depreciation causing a market decline and an appreciation causing a market rebound.”
The market may also react to the US consumer spending and personal consumption expenditures price index data released on Friday and the S&P Global Philippines Manufacturing purchasing managers’ index report set to come out this week, Mr. Tantiangco said.
“Chart-wise, the local market remains on a downtrend. In last week’s trading, the market fell after failing to hold its position above its 50-day exponential moving average, meaning the line remains as a resistance. On a positive note, the market is still holding its ground above 6,000, meaning the said level remains as a support,” he said.
2TradeAsia.com said the market may remain volatile and further test its support levels. It put the PSEi’s immediate support at 6,000 and secondary support at 5,800, while its resistance is pegged at 6,150-6,200. — Alexandria Grace C. Magno