By James A. Loyola
The local stock market is seen to look overseas for cues this week and may start off on the positive side after US markets ended the week on a strong note.
“The index will have to take its cues from US markets next week on a lack of clear and major catalysts for the PSEi,” said Papa Securities Sales Associate Gabriel Jose Perez.
Investors are also seen to continue picking up stocks whose prices have eased to attractive levels in the past week, especially those that had reported good second quarter results.
Among these is Pilipinas Shell shares that Abacus Securities Corporation is advising investors to accumulate as it is “on track to substantially beat consensus as well as last year's earnings.”
Top online brokerage COL Financial is betting on First Philippine Holdings after it reported a strong second quarter of the back of better-than-expected results of its subsidiaries First Gen Corporation and Rockwell Land.
Also on COL’s buy list is Cebu Air “given the relatively lower jet fuel prices and its fleet and capacity expansions. Moreover, valuations remain attractive.”
COL also likes SSI Group because of its strong first half result which “reaffirms our bullish view on the company, underpinned by strong consumption trends and expanding margins due to efficiencies.”
Despite current weakness in coal prices, COL also favors Semirara Mining and Power Corporation because “we believe that much of the negative news is already priced-in… the stock is also the cheapest among all power companies.”
Perez said initial support for the Philippine Stock Exchange index would be around the area of its previous intraday lows around 7,620, and the major one would be at May's low of 7,475.
BDO Chief Market Strategist Jonathan Ravelas believes that last week's close at 7,795.98 continues to signal the market to consolidate within the 7,700 to 8,000 levels in the near-term.
“However, downside risk remains towards the 7,500 levels. If said levels are broken could see a retest of the 7,000 to 7,300 levels,” he warned.