By James A. Loyola
With only eight trading days remaining in 2018, volatility is seen to prevail in the local stock market although some investors continue to hope for a “Santa Claus” rally spurred by year end window dressing.
Traders work beneath an electronic ticker at the trading floor of the Philippine Stock Exchange in Bonifacio Global City (BGC).(Bloomberg file photo)
Since the year is almost over, stock analysts are setting their sights on stocks that are seen to do well in 2019 and are advising investors to position in these counters while they are still relatively cheap.
“More corporate actions ahead of 2019 prospects would be at the forefront, specifically on debt restrategies and inventory loading,” said online brokerage firm 2TradeAsia.com. It added that, “some might also close the year with merger and acquisition prospects, specifically those eyeing to go on backdoor listing.”
The brokerage firm said “volatility will color the eight remaining trading days for 2018, as fund managers retool their portfolios… Consider revisiting ‘sturdy reliables’ such as defensive blue chip plays, and stocks with promising carry-over stories in 2019 (telco, energy, conglomerates).”
While most of Abacus Securities Corporation’s top picks for 2019 are carry-overs and have already been recommended late this year, the firm has renewed its recommendation for East West Bank as its stock price is seen to have bottomed after a couple of unfortunate events and is seen to be recovering.
Another top pick of Abacus is LBC Express Holdings, Inc. because of its long-term prospects as the country’s leading logistics firm amid a surge in online shopping. While the stock is not liquid, trading activity is seen to get a boost once its follow-on offering pushes through.
Abacus is also bullish on First Gen Corporation and recommends a BUY if its share price pulls back due to the firm’s potential long-term earnings growth story and its higher stake in its geothermal power subsidiary.
Meanwhile, from a technical standpoint, Abacus said the weekly chart of the Philippine Stock Exchange index is showing an important trading range after bouncing off its key support level at 6,790, signaling that “a rally attempt is underway.”
Eagle Equities Head of Research Christopher Mangun noted that, “next week is going to be very crucial for our market since it will be the last full trading week for the year as we come up on the holidays.”
“The close above 7,500 for this week was exactly what this market needed. The target for next week is to break above its resistance at 7,630 and possibly close above 7,700,” he said.
Mangun explained though that, “this will all come down to whether investors will continue to trade and not go on early vacation” and, “if foreigners continue to be net-buyers, there is a strong possibility that we end the year closer to 8,000.”