By James A. Loyola
The local stock market will continue to be influenced by how the US-China trade row develops as well as how local monetary officials act to control inflation and a weakening peso.
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“Resolutions that would put clearer guidelines in resolving the US-China trade row will be a boost for equities, having regressed from its recent high this year,” said online brokerage firm 2TradeAsia.com.
It added that, “this issue is something that investors will have to deal with on a daily basis, pending clearer outcomes of talks.”
Amid these challenges, the brokerage advises investors to “take things in stride by positioning entry and exit points within a modest range. As first half earnings unfold, start hunting for stocks with good fundamental merits and solid upside potential.”
SB Equities is putting retail stocks in focus, noting that the share prices of consumer stocks such as Puregold and Robinsons Retail were badly hit by negative sentiment.
“However, we believe the sell-down is not justified given both companies’ strong track record and robust first quarter results,” it added.
SB Equities favors grocery retailers over non-grocery retailers as consumer staples delivers more stable and defensive earnings against cyclical downturns and has thus chosen Puregold as its top pick.
Meanwhile, Abacus Securities Corporation is recommending a trading buy for JG Summit Holdings Inc. shares as the share price is attempting to bounce and had hit a 10-day high last Friday.
Abacus also sees East West Bank as a low-risk buy as it has started to rally and has reclaimed its 10-day moving average. It is also recommending investors to accumulate Shakey’s Pizza shares as it has rallied back to P13.04 and may be looking to test P13.88 per share.
From a technical standpoint, Eagle Equities Research Head Christopher Mangun said “the month of July is looking brighter and brighter as the index had another good week… If it continues with its current momentum, the trading gap between 7,400 and 7,500 may be filled in the following weeks.”
“We are looking at two scenarios next week. The first is that we start to see volume come in, and the index is going to try and test the next resistance at 7,500. This will also confirm that the index has reversed and that we have come to the end of this bear market,” said Mangun.
He added that, “the second scenario is that investors will take gains as several blue-chips have gained 10 percent in the last two weeks and we will see the index come back down to support at 7,185.”
Mangun pointed out though that, “based on the market sentiment, the latter scenario is more likely to take place.”