Stocks may enter bear territory

Share prices are expected to continue their decline this week, with the strong possibility that the benchmark index may enter the bear market territory amid the worsening COVID-19 contagion.

Analysts said the market could test the 6,692.23-point level in the coming trading days, marking a 20-percent slide from its 2019 high.

“Local and international markets did not find any relief on pandemic concerns yet,” said Regina Capital Development Corp. managing director Luis Limlingan over the weekend.

Investors are concerned over the outbreak as it spreads to many parts of the world and its impact on economy and earnings growth this year.

While the sell-off has taken the index’s valuation down to about 13 times estimated the earnings for next year, analysts said investors were still staying on the sidelines in anticipation of a further market decline.

The Philippine Stock Exchange Index last week plunged 7.9 percent to 6,787.91 while the broader All Shares Index slumped 6.5 percent to 4,064.32.

All sub-indices registered week-on-week declines, led by mining and oil which dropped 8.97 percent, holding firms by 8.2 percent, and property by 7.9 percent. The financials index tumbled 7.6 percent while industrial and services fell 7.07 percent and 6.47 percent, respectively.

Foreign investors were net sellers for the week by P9.43 billion, while the average daily value traded reached P8.6 billion from the previous week’s average of P6.1 billion.

The PSEi lost 13.1 percent in the first two months of the year, while foreign net selling amounted to P16.2 billion.

Weekly top price gainers include Euro-Med Laboratories Phil. Inc., which jumped 42.6 percent to P3.78, ABS-CBN Corp., which rose 15.1 percent to P22.65, and Emperador Inc., climbed 6.2 percent to P8.02.

Weekly top price losers seres were Philweb Corp., which declined 25.2 percent to P2.40, Robinsons Land Corp., which dropped 15.8 percent to P21.30, and Aboitiz Equity Ventures Inc. which dipped 15.5 percent to P42.65.

Global stocks slumped Friday to mark the largest weekly drop since the 2008 global financial crisis over fears the coronavirus could wreak havoc on the world economy.

Crude oil prices tumbled as well and analysts said central banks, especially the US Federal Reserve, might have to shift into crisis-resolution mode with urgent interest rate cuts.

Frankfurt headed the losses in Europe, shedding almost 3.9 percent as the market closed.

Leading European stock markets have lost more than 10 percent in just one week, with London’s FTSE 100, which fell by 3.4 percent on Friday, dropping 11.3 percent.

Wall Street also had another difficult day, with the Dow finishing down 1.4 percent at 25,409.36, which meant a drop of more than 12 percent for the week.  

But US indices cut their losses after Federal Reserve Chair Jerome Powell released a statement saying the US economy remains “strong” but vowing to “use our tools” to provide support if needed.

The markets in Shanghai, Sydney, and Tokyo all closed down 3.0 percent, while Jakarta shed more than four percent.  With AFP