ILOILO City – Investors and traders experienced a bad market slump again this week, as the Philippine stock market plunged back to the 7,500-point level, the major line of support, after reaching 7,800 points in the previous week.
Local technical analyst Hernan Segovia described the situation as “fragile,” blaming a combination of foreign capital outflows, high inflation and interest rate hikes as the culprits behind the stock market and more generally, the economy’s woes.
“There was so much hope last week that the market will rally back to 8,000, as it rallied back to 7,800. Unfortunately, we went back down to 7,500 due to concerns about interest rate and the weak peso,” Segovia said.
Segovia cites in particular the continuing decline of the peso and the limited reaction of the Banko Sentral ng Pilipinas in response to the problem.
“There’s no concrete suppression in order to protect the peso’s weakness. So in effect it adds more inflation to the system,” Segovia said.
When asked if the situation will recover, Segovia said that the index must bounce from the 7,500 level next week, otherwise the situation could get even worse. However, with the peso growing weaker and the market locked in its bearish momentum, investor sentiment is becoming more pessimistic.
Moreover, the index had already tested these levels before, and it failed to reverse into a bullish trend, indicating the general weakness of the economy.
“The market is waiting to be a shattered glass right now,” Segovia said about the current state of the market./PN
