Market seen to continue downward drift this week

MANILA, Philippines - The local stock market is expected to continue its downward drift this week on lingering concerns that the global financial situation could worsen in spite of the passage of an economic stimulus package.

Last week, the main composite index fell 38.22 points, or 1.99 percent, to close at 1,881.44.

“Questions such as how low the Dow can go and how will the local economy hold up when nations all over the world are recording contractions are just some of the queries investors are looking answers for,” said Anthony Prince Yeung of AB Capital Securities.

The Dow Jones Industrial Average fell a hefty 6.17 percent over the week to its lowest level since October 2002 at 7,365.67 on Friday, dogged by concerns that key banks such as Bank of America and Citigroup will be taken over by the government.

Yeung said the PSEi may retest the 1,830 support level this week especially if the DOW remains below 8,000.

However, he said  the local stock market is in a much better position than the Dow.

Most of the trading sessions last week was dominated by Manila Electric Co. (Meralco) on persistent rumors that its two major stockholders — the Lopez family and Southeast Asia’s largest food and drink group San Miguel Corp. — are out to amass more shares in preparation for the utility giant’s scheduled annual stockholders’ meeting in May.

Meralco jumped P3.50 or nearly four percent to P91.50 last Friday.

April Tan, research head at CitisecOnline, said that while the stock market might have already reached its bottom, recovery would take a while.

Tan, however, believes that now is a good time to buy fundamentally sound stocks that have experienced extreme valuations.

Among these issues include Metrobank, Security Bank, Ayala Land, Robinsons Land, Globe, Universal Robina Corp, EDC, Aboitiz Power Corp.