By James A. Loyola
The local stock market is seen to look for direction from firms announcing first quarter performances and plans for the year although some investors may opt to wait in the sidelines until elections are over.
“Earnings indication for the first quarter of 2019 will be released this week, with the line-up comprising 40 percent of the benchmark index, 30 percent of All Shares gauge,” noted online brokerage firm 2TradeAsia.com.
It added that, “expectations on how earnings would trend in succeeding quarters will bear weight, as listed firms lay out on capex plans, apart from those regularly declaring dividends based on 2018 performance.”
However, the brokerage warned that, “Prudence will be key, with the looming MSCI rebalancing, US-China trade deal outcome and mid-term elections on May 13.”
Thus, it advised investors to be “sector-selective” and focus on banks and property firms on possible monetary policy easing and consumer shares due to lower inflation and election-driven spending.
Abacus Securities Corporation sees some opportunity in cement stocks, particularly Cemex Holdings Philippines Inc. and Eagle Cement Corporation, on expectations of higher prices after government said it will not intervene in the market unless prices hit P240 a bag.
Meanwhile, both Abacus and COL Financial are rooting for Aboitiz Power Corporation even though the firm had just reported lower first quarter earnings.
“We like the stock because it has the most robust pipeline among the listed generation companies,” said Abacus but noted that, “we would look to buy at lower levels.”
For its part, COL said Aboitiz Power is now trading at lower valuations even though it is still seen to post strong earnings growth. It cited the power firm for being the fastest in the power sector, even with lower contract prices and rising coal costs.
Eagle Equties Head of Research Christopher Mangun noted that, while there is some concern after the main index tried and failed to break above 8,000 for the third time in the last two months, there is still hope if it does not break below 7,800.
“The market may continue within this range for a few more weeks but I am still inclined to believe that this market is going to go higher,” he noted.
This is because, “Economic fundamentals are just incredibly good right now and even corporate earnings are expected to perform better than what we saw in 2018.”