THE stock market could see some lift from bargain-hunting this week, analysts said, but further declines cannot be ruled out given the peso's continued weakness and bearish investor sentiment.
The benchmark Philippine Stock Exchange index (PSEi) snapped a seven-day selloff on Friday but still ended down 4.3 percent week on week at 6,676.65.
Philstocks Financial Inc. research manager Japhet Tantiangco said that "the local market's technicals continue to show a bearish bias with the bourse already falling for four straight weeks, the last one being the deepest so far."
The drop, however, has brought the PSEi to "even more attractive levels, opening the possibility of bargain hunting in next week's trading."
"If our current headwinds are still present next week, then the risk of another decline is still high," Tantiangco said.
Standing in the way of a rebound is the peso's continued weakness — it continues to trade in the P58:$1 level — and the possibility of protectionist policies being implemented by US President-elect Donald Trump.
"On a positive note, our sound [third quarter]/1st 9 months corporate results may give the market support," Tantiangco said.
Online brokerage firm 2TradeAsia.com also noted that investor sentiment was continuing to weigh on equities.
"Markets have been strung tight since late October, exacerbated by the US elections and, most recently, comments from [US Federal Reserve officials]," it added.
"While the US central bank proceeded with its 25 [basis points] cut for November, inflation approaching its target range plus a strong jobs market were cited as reasons not to rush with the rate cuts," it added.
"Broad-based rallies are not seen in the very short run due to the recent barrage of global uncertainties, on top of real erosion in present fundamentals."
2TradeAsia.com noted that while domestic inflation was looking to be more manageable than regional peers, the country's reliance on imports will likely be felt and geopolitical tensions and upcoming typhoons would have some impact on growth.
"On a more positive note, Create More being signed into law should help alleviate the pressure on corporates with the freed-up cash flow in time with high-activity midterm elections by [second quarter]," it said.
"The short of it is that the base case has shifted to the left amid increasing downside risks, [such as] return to value and sticking to sectors with less exposed weak points, including foreign exchange exposure, and import dependence."
Unicapital Group research head Wendy Estacio-Cruz, meanwhile, said "we expect the index to range between 6,500 and 6,700, in anticipation of fresh catalysts, including the release of Philippine inflation data for November on December 5 and the FOMC (Federal Open Market Committee) meeting on December 18, which will help determine the potential rate cut."
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