Market expected to remain volatile

MANILA, Philippines - Volatility in the local stock market is expected to persist this week as concerns over the weakening global economy linger and will continue to shake up investor confidence.

With instability seen globally, analysts believe that the local market will remain drifting sideways, but with a downward bias.

 “Expect increased volatility, pending the US and European community’s response in accelerating measures to support growth, as well as concerted measures to counter ebola’s epidemic,” said Jason T. Escartin, investment analyst at F. Yap Securities.

Despite the sour mood abroad, Escartin said the Philippine’s strong economic prospects may push bargain shoppers and help keep the local benchmark index above the 7,000 level this week.

 “It has been a rough week for global equities but local share prices managed to show resilience gaining in the last three sessions to restore the PSEi above the 7,000-mark,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

The Philippine Stock Exchange index (PSEi) closed 0.36 percent or 25.36 points lower on Friday but remained above the 7,000 mark at 7,003.22. Last Monday, the bellwether index fell below the 6,900 level for the first time in two months.

Week-on-week, the PSEi tumbled 2.29 percent with net foreign investors trimming their exposure on local equities following lower global growth expectations.

For Calaycay, the last two weeks showed a massive correction in equity prices after a steep rise seen in previous weeks.

 “Despite negative sentiments in the world markets, local fundamentals remain strong with OFW remittances growing 7.2 percent to $2.2 billion in August, from $2.1 billion in the same period last year. However, market volatility remains high with foreign inflows and outflows dictating the pace of the market,” analysts at AB Capital Securities Inc. said.

AB Capital Securities analysts said the local benchmark index needs to close above the 7,200 level to break out from the current bearish trend.

Analysts agreed and placed immediate support at 6,950 to 7,000 while resistance levels are at 7,100 to 7,200.