Expect bears to take over this week on rekindled virus fears

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The resurgence of local COVID-19 cases, which hit a daily high of 17,231 on Friday, is expected to temper risk-taking on the stock market this week.

The Philippine Stock Exchange’s main index (PSEi) gained 313.03 points or 4.9% last week, closing at 6,633.22 on Friday as investors digested the latest PSEi rebalancing and the easing of restrictions quarantine in Metro Manila. On Friday, however, sentiment turned gloomy as investor attention shifted to the daily COVID-19 log and the highly contagious Delta variant.

As such, Eagle Equities chairman Joseph Roxas expects the main index to trade with a bearish bias this week.

Any rise would likely be limited to the 6,700 level as COVID-19 cases hit “breakout” levels, Roxas said.

The index could consolidate and find support at the 6,500 level, while the next barrier is seen at 6,300, according to Roxas.

BDO Unibank chief strategist Jonathan Ravelas said last week’s close would signal further consolidation of the main index between 6,300 and 6,700 frontiers in the near term.

Last week, credit watchdog Fitch Ratings said a resurgence of COVID-19 cases in July and August in several Asia-Pacific (APAC) markets could affect a number of companies in the region during the second half of the year, weakening the outlook for a reversal of the situation linked to the pandemic. negative rating stocks.

Since early March 2020.

In a separate commentary, Fitch said that Philippine bank issuer default ratings are sensitive to movements in the sovereign rating, currently at “BBB” with a negative outlook.

“We predict that the COVID-19 pandemic will continue to challenge business prospects, loan quality and bank profitability over the next 12 months,” he added.

—Doris Dumlao-Abadilla INQ

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