Solidarity in the time of COVID-19 -- MS Supplement

Voltile market trading to persist

Trading at the Philippine Stock Exchange is expected to remain volatile this week even as share prices have reached oversold levels.

Analysts said while indicators showed a technical correction was inevitable given the steep decline over the past trading days, rallies in the near future would be short-lived.

Jonathan Ravelas, chief investment strategist of BDO Unibank Inc., said Philippine stocks were trading at 10x the P/E ratio compared with the five-year average of around 17x P/E ratio.

“For first-time investors, this is a good opportunity to invest for the long-term. While for investors who are already in the market, this is the time to revisit our portfolios and see where we can increase our holdings. The market may still fall but use it as an opportunity to accumulate,” Ravelas said.

“This COVID-19 outbreak is not a permanent risk. This too shall pass. Thus, the depressed prices in the stock market and its impact to the economy is temporary. There is no need to unload your shares,” he added.

The Philippine Stock Exchange Index last week plunged 17.5 percent to 4,778.76 points on massive selloff due to new coronavirus (COVID-19) pandemic.

All sub-indices posted double-digits declines, led by mining and oil (-20.8 percent), holding firms (-18.9 percent), financials (-17.8 percent) and property (-17.3 percent). The industrial index declined 14.8 percent while services dropped 12.6 percent.

The index is now down 38.8 percent since the start of 2020.

Foreign investors were net sellers by P3.7 billion, while the average daily value traded stood at P7.5 billion.

Weekly top price gainers were Concepcion Industrial Corp., which rose 16 percent to P29; AgriNuture Inc. added 1.4 percent to P6.49; and Puregold Price Club Inc., which gained 0.3 percent to P32.

Weekly top price losers were Vista Land & Lifespaces Inc., which declined 38.7 percent to P3.40; Megawide Construction Corp., which slumped 36.8 percent to P6.83; and Robinsons Land Corp., which dropped 31.7 percent to P11.74.

Meanwhile, European stocks gained Friday following the latest stimulus measures, but Wall Street equities plunged again on mounting worries over the coronavirus as oil prices suffered another drubbing.

Economists continued to slash their projections as more governments institute measures to clamp down on most commercial activity, except for essential services. 

On Friday, New York Governor Andrew Cuomo ordered non-essential businesses to close and banned all gatherings, a dramatic escalation of mitigation steps after the nation’s most populous state California on Thursday directed its 40 million residents to stay at home.

The Dow tumbled another 4.6 percent, or around 915 points, to end at 19,173.98, below the level when President Donald Trump was inaugurated in January 2017.

The pummeling concluded Wall Street’s worst week since 2008.

“The rapidly spreading coronavirus has mobilized the nation’s policymakers, resulting in massive injections of monetary and fiscal stimulus not seen since 2008 and 2009,” Oxford Economics said in a note about the US. With AFP

Topics: Philippine Stock Exchange , Jonathan Ravelas , COVID-19 outbreak
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