Market volatility seen to continue this week

The stock market is expected to experience a little volatility this week given continuing concerns over a credit crunch sparked by the rising subprime problem in the US

Global markets have taken a beating this month on fears that damage from default US subprime mortgages will drain the cash flow to the broader world economy

 “The fears that investors still harbor are not unfounded as the Philippine market looks to continue the roller coaster ride that it is on. The subprime woes will continue to make the market volatile while a return to fundamentals in terms of stock valuation will improve the confidence of investors,” said AB Capital Securities research head Jovis Vistan.

Vistan said the market is tied to the US bourses and will move along with it.

He, however, believes that this week would be better than the previous weeks as moves by subprime companies to clean up their act coupled with the support of central banks push the market towards the road to recovery.

Last week, the PSEi gained an impressive 322.6 points or 11.18 percent at 3,206.94.  The highlight of the week was Tuesday’s gain of 283.18 points, the highest in seven years.

“The jump that the market made, owing to the market resurgence in Asia and the belief that the Philippine economy remained fundamentally sound, enabled investors to cash in on quick profits. Investors were quick to realize what profits they could get as worries tied to the US still persist,” Vistan said.

Summit Securities president Harry Liu said the market is expected to go into a”short-term consolidation” mode in preparation for a possibility of a medium-term rally that could push the PSEi between 3,400 to 3,450.

He said the market may trade between 3,200 and 3,000.