Stock market remains on volatile ground

MANILA, Philippines - Volatile sessions are likely to characterize trading once more on Philippine stocks, as the market remains in search of positive leads that will reverse the gloomy picture.

Continuous selling pressures from fund managers’ portfolio adjustments will weigh down investor sentiment amid strong local fundamentals, analysts said.

“Moving forward, it seems like the market will remain volatile given the changing investment landscape,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

“We remain sensitive to the trends overseas,” he said, adding that the market will likely consolidate within the 6,100 to 6,500 range.

Week-on-week, the benchmark Philippine Stock Exchange index lost 0.96 percent or 60.09 points to 6,182.17, marking its fifth straight weekly decline.

“Trading was initially bullish last week but the trend began to point downwards due to the results of the US Federal Reserve’s meeting held at the middle of the week and because of the sharp drop in gold prices,” brokerage firm RCBC Securities Inc. said.

Asian and global markets suffered from selloffs as the US Fed confirmed fears that its bond buying stimulus program could be tempered late this year and might end in 2014 if the US economy further improved.

Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said the main index bounced back towards the 6,500 but was not able to sustain that level. Ravelas said “this puts the 6,000 levels at risk.”

For Roberto Juanchito T. Dispo, president of Metrobank Group’s First Metro Investment Corp., the lack of new positive catalysts in the next three to six months will further dragdown share prices.

“If no support appears at the 6,000 levels, this could call for further losses towards the 5,800 levels and give the bears the signal to cross the street,” Ravelas said.

“The consolidation is still considered healthy. But if it goes below 6,000, I think that is no longer justifiable as the local economy remains strong,” Del Castillo said.

In the first quarter, the Philippines posted a higher-than-expected 7.8-percent economic growth, the fastest in the region and slightly overtaking China’s growth. A robust economy assures continued growth in corporate income.

Dispo said depressed share prices, however, will provide an attractive opportunity to increase exposure in Philippine equities.