Shares seen to remain volatile

Share prices are expected to stay volatile this week as the market recovers from the effects of the global stock market sell-off earlier last week, dealers said.

"It will remain volatile. We are going to be moving up and down with the rest of the equities markets. Emerging market risks, at least as far as perceptions are concerned, have gone up," said Ed Bancod of ATR Kim Eng Securities.

"The Philippine market still has enough fundamentals as support, the most vital of which is the low interest rate at this time. But in the near term, the index may vacillate between 3,000 and 3,200 points," said Claire Quiray of Accord Capital Equities.

Bancod agreed that "there is nothing wrong with the fundamentals, nothing really changed. You still have abundant liquidity in the financial system, economic growth is gaining traction," despite the worldwide stumble in the stock market that began in Shanghai earlier this week.

For the week to March 2, the Philippine Stock Exchange composite index slipped 249.03 points or 7.39 percent 3,140.34.

Average daily volume rose to 17.3 billion shares worth P6.92 billion from 7.46 billion shares and P4.62 billion in the previous week.

"Further downside risks are imminent given the decline in global risk appetite especially after a correction of this magnitude. Note that emerging markets such as the Philippines cannot be decoupled from major shocks brought about by developed markets," AB Capital Securities said.

"Looking at the positive side, the Philippine market was bound for a deep correction anyway and the excess liquidity in the system (brought about by the sell-off) is expected to come back, although not immediately. This correction cancels out the exuberance and prevents prices to get out of hand and move dangerously ahead of earnings. At the 3,400-level, investors were already paying the fair amount equal to our year’s estimated EPS growth of 16 percent," AB Capital Securities added.

AB Capital Securities, however, said the market remains fundamentally strong, pointing out it is still up by six percent year to date.

"The PSEi has remained within its bullish trend line and is still 20 percent above its 200-period moving average, which is in an upward trend. For now, investors should not get nervous and sell out at a possible bottom. Instead, we should look at this as an opportunity and focus on bargain hunting," ABCapital Securities said. — With AFP