The Main Philippine shares index extended its slide to a third week, adding a huge -404.21 points to the -102.74 points combined loss in the two immediately preceding weeks. More importantly, the PSEI breezed past ALL short-term Fibonacci retracement lines in the last four sessions, breaking previously seen as strong support levels.

PE ratios fell as a consequence, with a good number going below 10x trailing earnings. Brazil’s BOVESPA, London’s FTSE 100, France’s CAC40, Germany’s DAX50, China’s Hang Seng, Singapore’s Staits Times and Vietnam’s Ho Chi Minh all showed trading multiples of less between 8.0x and 10.0x after Friday’s trades. The PSEI’s multiple dropped to 13.32x, below the 10-year historical average of 15x. Among the ASEAN 6 economies, only Thailand (11.6x), Jakarta (14.9x) and Malaysia (14.6x) have higher numbers.

Moving forward, investor sentiment will largely be driven, maybe torn apart, by (1) valuations, (2) technical conditions, (3) Europe and (4) the US.

The uncertainties will continue to be the focal point for markets in the coming days and weeks. We will take a closer look at domestic firms’ earnings for Q3 and the prospects for the full-year. Although it will be difficult to keep an optimistic view amid given the present environment, ours continue to be guarded. We maintain that cost-averaging on and accumulating fundamentally sound companies is the best portfolio management strategy moving forward.

Stay cautious, this might be a good opportunity to accumulates cheaper stock shares.