China, Fed concerns to weigh on PSEi


Posted at Mar 17 2014 04:28 PM | Updated as of Mar 18 2014 12:28 AM

MANILA, Philippines – The Federal Reserve's tapering of its stimulative quantitative easing policy, as well as continued problems in China and the Ukraine crisis, will continue to weigh on the stock market, a fund manager at RCBC said on Monday.

Rico Gomez, vice president for trust trading at RCBC, said concerns about China and the Ukraine crisis are expected to have an “immediate impact” on trading. On the other hand, the effect of the Federal Reserve's tapering will continue to linger throughout the year.

“The Fed's response or action is something to monitor throughout the year. You’ll have China problems being put to the microscope early, but the Fed will always be there, they will control underlying liquidity, which is what the market is driving on right now,” he told ANC.

Gomez also said the problems with China have been affecting trade in the mining sector.

“I think the more immediate concern is the China problem, we’ve already felt it in the mining sector. A lot of the China crediting issues are filtering down to the mining sector and that is why the mining sector has been down the past three days,” he said.

The streak of foreign buying in Philippine shares, meanwhile, is only short term, said Gomez.

“I firmly believe that we will need to show numbers in the first quarter before we can actually drag the market further. Right now, unfortunately, we are a function of global liquidity. Domestic liquidity remains high but if you look at local fund managers, they are not aggressively buying,” he said.