Stocks seen on downward spiral as investors still edgy

MANILA, Philippines - The local stock market may be headed for a downward spiral this week as investors remain edgy over growing fears of another US recession and destabilization in Europe’s financial system.

“Heading into this week, investors will be wary of the twin troubles of US and Europe. As a result, risk aversion will most likely prevail this week. Investors looking for bargain stocks are advised not to be too hasty in buying,” said Prince Anthony Yeung of AB Capital Securities.

“The current problems of the US and Europe will not disappear overnight and solutions should be for the long term and not short term or quick fixes,” Yeung added.

Yeung, however, pointed out that the local economy remains in good condition and has been kept under control while the government is confident that the second half would yield higher economic growth.

 The Philippine Stock Exchange index managed to post a 0.42 percent gain last week, largely due to follow-through buying in PLDT, Lepanto and San Miguel.

With the deadline of its transaction with JG Summit regarding the purchase of Digitel shares nearing, investors had been gobbling up PLDT shares.

Lepanto continues to be on investors’ radar, with gold prices reaching record levels and the deadline for Gold Fields to exercise its option to acquire 60 percent in the undeveloped gold-copper Far Southeast deposit in the Philippines.

Philex will also be a beneficiary of high gold prices as it is the largest listed miner of gold, Yeung said.

“While declines in share prices do offer opportunities to accumulate stocks, investors are also advised to lighten up during rallies,” Yeung said.