COVID-19 situation to dictate market movement

INVESTORS will continue monitoring the coronavirus disease 2019 (COVID-19) situation as the country continues to post record daily tallies, causing the government to extend restrictions.

The benchmark Philippine Stock Exchange index (PSEi) shed 33.91 points or 0.49% to close at 6,786.62 on Friday, while the broader all shares index went down by 0.89 point or 0.02% to 4,204.11.

Still, the PSEi gained 153.40 points from its 6,633.22 finish on Aug. 20.

Financial markets are closed today, Aug. 30, in observance of National Heroes Day.

“The market’s strength for the past sessions is atypical for the season and has rewarded those who were able to buy the dips. Based on our research, August and September are usually down,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message on Friday.

Timson Securities, Inc. Trader Darren Blaine T. Pangan said the local bourse performed well this month due to positive corporate earnings reports and economic data releases.

“The ascent of the index was, however, tempered by the resurgence of COVID-19 cases in the capital region, which in turn prompted the government to put back strict quarantine measures in Metro Manila and nearby provinces,” Mr. Pangan said in a Viber message on Saturday.

Metro Manila was placed under enhanced community quarantine for two weeks until Aug. 20 to curb rising cases due to the more infectious Delta variant of COVID-19. This has since been eased to a modified enhanced community quarantine, which will be implemented until Sept. 7.

The Health department logged a record 19,441 new infections on Saturday, bringing total cases to 1,935,700. Active cases stood at 142,679.

Mr. Pangan said the market’s performance in the coming months will depend largely on the COVID-19 situation in the Philippines.

“Major catalysts for the rest of the year are inoculation targets being met, enabling looser mobility restrictions, [the] ramp-up in government infrastructure spending, BSP (Bangko Sentral ng Pilipinas) liquidity support, and global economic recovery boosting OFW (overseas Filipino workers), BPO (business process outsourcing) and Philippine exports,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a separate Viber message on Friday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the increase in vaccine arrivals “will structurally help better manage or control new COVID-19 cases in a more sustained manner or at least help prevent the more contagious Delta variant from spreading further.”

“Our [outlook] for the rest of the year is positive, the market will probably test 7,000 and beyond as more investors take positions in anticipation of a sustained recovery in the economy,” PNB Securities’ Mr. Lisbona said. —

Keren Concepcion G. Valmonte