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Profit taking to cap stock rallies

Traders expect share prices to remain volatile this week, with investors quick to cash in on gains during rallies.

BDO Unibank Inc. chief investment strategist Jonathan Ravelas said the market barometer Philippine Stock Exchange Index managed to post significant gains last week as investor confidence slowly came back after several government agencies announced their financial packages to boost the economy amid the COVID-19 pandemic.

“The U.S. rally helped dispelled some of the gloom, this reprieve is temporary since the pandemic is still spreading locally and globally,” Ravelas said.

“The week’s close at 5,266.62 highlights this technical rebound (dead cat bounce) has still some gas to try the 5,500-5,800 levels in the near-term. Expect some profit-taking as we near said levels,” Ravelas added.

First Metro Investments Corp., meanwhile, said the market recovery will ensue once the spread and fatality rates of the virus slow down significantly.

The PSEi last week jumped 10 percent to close at 5,266.62 while the broader All Shares index rose surged 9.2 percent to 3,219.50.

All major sub-indices also ended in green led by services (+13.4 percent), property (+12.7 percent), holding firms (+11.7 percent) and mining and oil (+9.5 percent). Financials also advanced by 4.6 percent while industrial improved by 3 percent.

Foreign investors were net sellers during the week by P3.8 million, while the average daily value traded stood at P6.9 billion from the previous week’s average of P7.5 billion.

Weekly top price gainers were Cirtek Holdings Philippines Inc., which jumped 63.6 percent to P6.30; 2Go Group Inc., which soared 38 percent to P6; and AC Energy Philippines Inc., which advanced 27.3 percent to P1.96.

Weekly top price losers included Megawide Construction Corp., which declined 14.4 percent to P5.84; Universal Robina Corp., which dropped 9.8 percent to P98; and Union Bank of the Philippines, which fell 3.8 percent to P52.

Meanwhile, stock markets on both sides of the Atlantic retreated Friday as investors banked profits from the week’s rally sparked by massive government and central bank action to protect economies from the coronavirus. 

“Today’s sell off is most probably a consequence of three days of strong gains and a paring of risk ahead of the weekend,” said Michael Hewson at CMC Markets UK.

He said it was “a welcome sight to see European stocks finish the week higher for the first time since mid-February, offering a welcome respite to some pretty battered portfolios.”

The Dow Jones Industrial Average sank 4.1 percent, or 915 points, to finish at 21,636.78, but leaving the index with its biggest weekly gain since 1931.

Oil markets saw another dismal day under the twin impact of the pandemic and an ongoing price war, with European benchmark Brent crude plumbing lows last seen in 2003.

“European markets have pulled back... with caution being the order of the day after such a good rally,” said Neil Wilson, chief market analyst at trading group Markets.com.

“Stimulus efforts have calmed markets” this week, Wilson said. With AFP

Topics: First Metro Investments Corp , BDO Unibank Inc , COVID-19 , Stocks , Philippine Stock Exchange Index
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