PHILIPPINE stocks were off to a rough start in 2016, mirroring declines across the globe and foreshadowing what analysts expect will be a volatile first quarter.
The benchmark Philippine Stock Exchange index fell by more than 5 percent to 6,575.43 by the close of the first week of January, partly on policy shifts in China and as global liquidity moves away from emerging markets like the Philippines. This also follows the “normalization” in the United States, which formally started with the Federal Reserve’s initial interest rate hike last December.
“There is a high probability of volatility and the reason being we have a very dynamic process involving US Federal Reserve policy and China,” Jose Mari Lacson, head of research at stock brokerage firm Campos Lanuza and Co., said in an interview.
“This would trigger moves and counter moves and those changing policies would create these spikes in volatility,” he added.
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April Lee-Tan, research head at COL Financial Group Inc., said the market was expected to move “sideways” for the first three months of the year.
“The possibility of higher local interest rates given the likelihood of a 100-basis point increase in the Fed rate and the implementation of the interest rate corridor in the second quarter of 2016 also act as risks,” Tan said in an e-mail.
