Shares to remain volatile this week, say analysts

Share prices are likely to remain volatile this week, following a wild swing the past week, as the market enters a correction phase, analysts said.

"The market is likely to be volatile and we suggest to wait for the market to stabilize since it can go either way. Our long-term outlook, however, remains bullish and we see the correction as an opportunity to enter the market," Roberto Cano of BPI Securities said.

He added while the market seems at a crossroads, the strong volume turnover over the past trading days and the sudden downswing present an opportunity for bargain hunters to appear this week.

"It is crucial for the market to sustain the 1,390 to 1,400 support range (this week). If successful, then, the market may still be able to regain its losses; if it falls further, the market may still test the 1,340 to 1,290 supports," he said.

At the end of the week, the Phisix had shaved off 20.45 points or 1.44 percent week on week to 1,396.38 as selling pressure in the latter half offset gains registered in the beginning of the week.

Although brokers attributed the negative bias to the market’s correction (when investors take advantage of higher share prices to take profits) following eight straight days on the rise, sentiment was further dampened by news of the pullout by CalPERS (California Public Employees Retirement System) from selected emerging markets, including the Philippines.

"Investors apparently jumped the gun in disposing of positions ahead of the announced selling position by the California pension fund. There is also some concern that other foreign funds may follow CalPERS’ lead and lighten up on exposure to select emerging markets," Cano added.

But despite the downturn, trading was heavy, averaging over P1 billion for the week with extended trading hours (which started on Wednesday) having a positive impact on trading volumes.

AB Capital Securities research head Jose Vistan Jr. noted that the extension helped in perking up turnover and easing volatility by having orders spaced out in a longer period.

"The urge to buy up or to sell down is now mitigated by the longer trading hours as opportunities of getting transactions done expanded with the length of trading. This development caused some degree of boredom in the market and could have contributed to the market’s much needed correction," he said.

But he added the market’s ongoing correction should not be taken negatively since it is part of the confidence rebuilding process in the market.

"It’s only normal for profit taking to happen after a major upswing and we should see more backing and fillings in the coming weeks. Overall sentiment is still positive as interest rates and inflation are likely to remain low, the economy is recovering, and the problems in the South are now being addressed. The market will continue to rally in the near future, but not at the pace it enjoyed recently," Vistan said.

He added as the market undergoes this healthy correction, fresh buying may be delayed for the time being. Once the market has corrected significantly, he said, that’s when investors should come in and accumulate fundamentally sound issues.

"For the long haul, the market is likely to advance on expectations of a healthier economy this year. However, investors should not come in with reckless abandon like what we saw recently," he pointed out.