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Philippines: Lockdown extension to weigh on stocks
MANILA, Philippines — Stock investors are likely to weigh whether to take advantage of falling prices or hold off purchases as uncertainties over the health crisis continue to take their toll on the economy.
While there may be some bargain hunting in the early part of this week following last week’s steep drop, investors are still expected to take a cautious stance in light of the COVID-19 situation, said Japhet Tantiangco, an analyst at Philstocks Financial.
“For (last) week so far, our daily new COVID-19 case counts have averaged 10,785, higher than the preceding week’s 8,699. If the daily new case counts remain elevated, it will raise expectations of the extension of the strict quarantine measures implemented in the country, primarily in the National Capital Region. With this, the market may still close the week in the negative territory,” he said.
He noted that the extension of the strict social restrictions is expected to lead to more economic losses and more scarring for economic prospects.
“Chartwise, the market’s support is now seen at the 6,100 to 6,160 range. Resistance is seen at 6,400. The market’s 50-day exponential moving average has already crossed below its 200-day counterpart forming a ‘death cross’ which is a bearish signal, implying a possible downtrend moving forward,” Tantiangco said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the important market catalysts for the coming days include a decision on whether or not to extend the two-week enhanced community quarantine in the National Capital Region, which is supposed to end on Aug. 20.
Investors will likewise continue to monitor the trend in new COVID-19 cases locally. The count already breached the 14,000 level on Saturday because of the more contagious Delta and Lambda variants.
“Amid some delays in COVID-19 vaccine arrivals due to tight global supply, new COVID-19 cases could stay relatively higher and could still lead to some risks of lockdowns and other restrictions, moving forward,” Ricafort said.
Against this backdrop, he said the market’s next support levels are at 6,100 to 6,200 versus further downward correction from an intra-week low of 6,320.19 last Friday.
The next important resistance levels are at 6,570 to 6,670 levels, he added.
“Philippine financial markets mostly declined week-on-week after higher new COVID cases and more hawkish US Fed signals on possible tapering of bond purchases soon,” Ricafort said.
Source: https://www.philstar.com/business/2021/08/16/2120184/lockdown-extension-weigh-stocks