Philippine stocks slipped due to profit-taking
Global stocks hit an all-time high riding on optimism that fiscal spending will revive growth and boost corporate earnings. In Asia, shares rose for a third straight day on January 20, after US counterparts closed higher. Investors are more focused on the promise of increased economic support under President Joe Biden, looking past the increased COVID-19 cases and stumble on vaccine rollout. The economic support won’t be smooth sailing but if both stimulus and people getting vaccinated happened, there will be a boost in optimism, reported by Washington Post on Jan. 21 2021. MSCI +1.05%, S&P 500 +1.1%, and DOW 0.41% week-on-week.
Philippine Stocks slid 1.37% over one week and prior the inauguration of US President Joe Biden as investors started taking profits amid lack of positive market developments and sentiment was further dampened by the continued spread of COVID-19 in the country. Riskier assets and stocks dominated the market, while blue chip shares were sold down, in the anticipation of fast vaccine distribution and another round of fiscal aid ahead. On the virus front, the mutated virus found last week did not unsettle the PSEi as it was already been priced in by the investors and it’s only a matter of time. PSEi -1.37% week-on-week.
Philippine Bonds yields moved sideways for short-term bonds as demand persisted. Liquidity remains strong particularly on the front end, with assuring statements from BSP Governor Benjamin Diokno to continue supportive policies for economic rebound as well as Fed’s Powell message to keep rates low. National Treasurer Rosalia V. de Leon told reporters via Viber after the auction on January 18. The demand is seen in bonds with six months to one-year tenor as investors are seeking higher yields and be protected with sudden increase in rates. Investors are also not investing longer than three years in case there is a sudden economic turnaround that will push rates higher.
Sources: : (1) Washington Post, 01/21/2021: https://www.washingtonpost.com/business/on-small-business/global-stocks-rise-to-record-high-dollar-slips-markets-wrap/2021/01/20/8d79ccb0-5b7e-11eb-a849-6f9423a75ffd_story.html; (2) Wall Street Journal, 1/18/2021: https://www.wsj.com/articles/global-stocks-edge-down-to-start-the-week-11610960627; (3) Barron’s, 1/18/2021: https://www.barrons.com/articles/global-stocks-edge-lower-with-biden-adopting-traditional-dollar-stance-chinese-equities-gain-after-gdp-report-51610967473; (4) Inquirer, 1/21/2021: https://business.inquirer.net/316158/market-slips-by-0-77-2; (5) Inquirer, 1/15/2021: https://business.inquirer.net/315740/mutated-virus-fails-to-unsettle-psei; (6) Business World, 1/20/2021: https://www.bworldonline.com/stocks-drop-further-ahead-of-biden-inauguration/; (7) Business world, 1/19/2021: https://www.bworldonline.com/govt-hikes-t-bill-award-2/; (8) Business World: 1/20/21: https://www.bworldonline.com/govt-makes-full-award-of-treasury-bonds/