Technical rebound seen after last week’s slump

Philippine Shares may recover this week on a technical bounce despite the wave of second-quarter earnings reports anticipated to reflect declines.

The 30-member Philippine Stock Exchange index (PSEi) closed lower by 37.82 points or 0.63% to 5,928.45 on Thursday.

On a weekly basis, the index was down by 1.2%, marking its fourth straight week of decline and ending its three-month run of gains.

The market was closed for trading on Friday in observance of Eid’l Adha.

Value turnover for the four-day trading week climbed 10% to an average of P4.23 billion. Net foreign selling expanded 51% to an average of P521.2 million.

Sentiment last week was primarily driven by gross domestic product (GDP) reports across the globe, which showed the economic blow caused by the coronavirus disease 2019 (COVID-19) pandemic, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note.

Increasing COVID-19 cases in the country, which rose by 20,000 cases over the week to 98,232 on Saturday, also weighed on investor sentiment.

But the PSEi may snap out of its slump this week despite the continued flow of second-quarter corporate and macroeconomic reports, Mr. Mangun said.

“After four consecutive weeks of losses, the main index is due for a technical bounce and we may see it fulfilled in the coming week. This will be accompanied by an increase in trading volumes,” he said in a market note.

“Despite the negative economic data that will be coming our way…, the market may move in the opposite direction, just when everyone least expects it, as it has been moving irrationally since the beginning of this ‘new normal,’” he added.

On the other hand, online brokerage 2TradeAsia.com believes the upcoming data may push investors away, noting the month of August may see slower sessions at the local bourse.

“Uncertainties may prevail on (the second half) trajectory, as participants wait how companies will undertake their capex line-up,” it said in a market note.

Some corporate earnings expected this week are from Globe Telecom, Inc.; Metropolitan Bank & Trust Co.; SM Investments Corp.; Metro Pacific Investments Corp.; PLDT, Inc.; San Miguel Corp., International Container Terminal Services, Inc.; and Ayala Land. Inc.

The government is also scheduled to release second-quarter GDP data on Thursday.

2TradeAsia.com is putting immediate support within 5,500-5,700 and resistance within 5,980-6,000. Mr. Mangun is putting support within 5,800-5,700 and resistance within 5,970-6,040.

Meanwhile, global stock markets fell on Friday as doubts about the economic recovery from the coronavirus pandemic overshadowed strong earnings from US technology firms, while the dollar rose but was still set for its worst month in a decade, Reuters reported.

— Denise A. Valdez|BusinessWorld

Source: Peso Economics