DESPITE a strong peso, resilient domestic consumption and the coming holiday seasons, the Philippine stock market is in a poor state, greatly disappointing investors and traders. Numerous companies were hurt by last week’s trade, especially the larger ones, and it looks as though the situation may worsen.
Local stock broker and technical analyst Hernan Segovia is also concerned over the state of the Philippine Stock Exchange index, which is presently hovering around the 7,700 to 7,800 points. Contrary to his expectations earlier, he now believes that the market is headed into bearish territory over the long term.
“A lot of blue chip stocks have been battered,” Segovia said.
He then added that with the exception of certain companies like SM and BDO, the index was in turmoil last week.
The local stock broker said without two or three stocks propping things up, the stock index would most likely be in the 6,000 levels this Friday.
“I think the rebalancing of portfolios on the foreign side, and funds are shifting to the bonds market right now,” he explained. “Once we see those funds shift to the equities, we might see the market getting up again.”
When asked how the Philippine stock market could recover from this slump, Segovia was rather pessimistic and said that the only way the situation could be salvaged is if the currency strengthens past P50 to the dollar because it will make Philippine stocks significantly cheaper for foreign funds.
“We need a new thing in the market to prop up things – I don’t know what that is,” Segovia said. “The fundamentals are intact, but you see the sentiment is poor right now. So what we need is for the peso to strengthen more so that there’s a big forex differential, so that funds will shift back to equities.”/PN
