Bearish sentiment could again prevail in the local stock market this week, with investors still searching for positive catalysts to fuel a rally.
‘Market could remain sluggish until more positive news flow emerges. Apparently, Bangko Sentral ng Pilipinas (BSP) rate cut proved less of a perk-up. The Davao earthquake following that of Cebu is a bad reminder of climate vulnerability of the economy,’ First Metro Investment Corp. head of research Cristina Ulang said.
Sun Life Investment Management president Michael Enriquez also expects the market to continue its consolidation as the market digests the recent BSP rate cut.
‘Still no significant catalyst for the market this week,’ he said.
In the near term, Reyes Tacandong and Co. senior adviser Jonathan Ravelas said the market is seen to continue trading sideways within the 5,800 to 6,100 levels.
The Philippine Stock Exchange index (PSEi) finished in red territory last Friday at 6,037.79, down by 1.16 percent week-on-week.
The broader All Shares index also declined by 0.74 percent week-on-week to 3,658.44.
‘As of last week’s closing, the local market remains undervalued with a price-to-earnings (PE) ratio of 10.1x. This is below its five-year historical average of 17.3x and the regional average of 18.6x. As of the moment, the PSEi still has the lowest PE ratio among peers,’ Philstocks Financial research manager Japhet Tantiangco said.
Tantiangco said that while there are opportunities for bargain hunting in the coming days, the local bourse may still move with a downward bias.