Shares to extend decline on coronavirus impact

By Denise A. Valdez
Reporter

LOCAL SHARES are seen to keep dropping this week as the impact of the coronavirus disease 2019 (COVID-19) outbreak continues to haunt investors.

Following a decline to the 6,900 level on Wednesday, the Philippine Stock Exchange index (PSEi) fell further to close 6,787.91 on Friday, down 179.93 points or 2.58% from the previous session. This translates to an 8% drop on a weekly basis.

Last week’s trading saw the market’s worst weekly loss since 2011, AAA Southeast Equities, Inc. Research Head Christopher John Mangun in a market note.

“We could say that investors have capitulated and are not taking any chances despite prices already at multi-year lows prior to the selloff,” he said. “Even retail investors picked up on the unusual selling pressure and decided to take cash off the table.”

Online brokerage also pointed out the massive volatility in the market last week, having a range variance of 482 points (6,788-7,270) from 180 points in the week prior (7,292-7,472).

Value turnover grew 28% to P7.8 billion on average, and net foreign selling swelled to P2.36 billion from P249 million a week ago.

“Fund managers could only anchor on medical experts to come up with ways in containing coronavirus’ spread… There is no telling when such epidemic would come to a halt, including its overall impact on global commerce and trade,” said.

Despite this, the brokerage believes some investors remain watchful of opportunities to do bargain hunting. “With emotions running high, it is common to find some participants go risk-averse. However, seasoned investors who are more able to discern a different angle along this page are eager for an expected bounce and are just waiting to position on this stampede,” it said.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco thinks the same way, noting the PSEi is already at oversold levels. “[T]his could compel a few episodes of bargain hunting backed by 2019 corporate earnings,” he said in a text message.

But AAA Southeast Equities’ Mr. Mangun is more worried. He said the general sentiment has now worsened from fear to panic, and this is pushing investors to let go of profits to return to cash.

“Bears are completely in control of this market and the only question is how low it can go… We may see the market lose another 1,000 points or more if we ever see an outbreak on our shores,” he said.

Mr. Tantiangco said aside from news of COVID-19 developments, the drivers of the market this week will be the continued release of 2019 corporate earnings, the manufacturing purchasing managers’ index (PMI) data, and the February 2020 inflation data. He expects the PSEi to trade within the 6,600 to 6,800 level.

For , immediate support is 6,500 to 6,700 and resistance is at 6,850 6,950.