MANILA, Philippines — Market volatility may continue this week following last week’s slump that brought the benchmark index below the 7,000 level.
Donald Trump’s election victory in the US coupled with the slower Philippine economic growth for the third quarter resulted in a three-day slide for the Philippine Stock Exchange index, finishing 2.32-percent lower week-on-week to 6,977.18 last Friday.
“We expect market volatility in the Philippine stock market given his historically unpredictable foreign policy approach,” Unicapital head of research Wendy Estacio-Cruz said.
“Any shift in US economic policies, particularly interest rate decisions, could lead to a weaker peso, increasing import costs and potentially creating inflationary pressure in the Philippines, which could negatively impact companies and the local stock market,” she said.
Overall, Estacio-Cruz said that a Trump presidency could bring economic challenges for the Philippines, especially in trade, investment and remittances.
She said that Trump’s proposed tariffs on imports may hurt Philippine exports in sectors like electronics.
In terms of companies that are most likely to be affected, she cited property and conglomerates given their direct and indirect impact on interest rates as well as business process outsourcing demand.
“Consumer as well, due to possible inflationary pressures, especially those who are exposed to import and exports of products,” Estacio-Cruz said.
Philstocks Financial research manager Japhet Tantiangco, on his end, said that with a three-week drop, the local market is currently deemed to be at more attractive levels.
“Hence we may see some bargain hunting in next week’s trading,” he said.
“A strong ascent is not expected yet however as investors may continue to deal with our slow third quarter economic growth, weak peso and the challenging global economic outlook due to the possibility of protectionist policies in the US amid a Trump presidency,” Tantiangco said.
Tantiangco said that if the market is able to get back above the 7,000 level, then it will still be considered as its support while immediate resistance would be at the 7,100 to 7,150 range.
However, if it fails to do so, he said the 7,000 would be its resistance while next support would be at the 6,700 to 6,800 range.