Earnings, inflation, GDP to dictate stock prices

By James A. Loyola

With the local stock market benchmark failing to remain above the critical 8,000, stock prices are seen to continue to try to break this resistance while combing through corporate earnings reports and macro-economic data expected this week.

BDO Unibank Chief Market Strategist Jonathan Ravelas noted that, “investors remained sidelined ahead of the inflation report on November 5 and the release of the third quarter GDP on November 7.”

“Last week's close at 7,977.12 continues to highlight the market's difficulty to stay above the 8,000 levels. Look for another attempt of the 8,000 levels,” he added.

Ravelas warned that, “failure to try the said levels could cause some profit taking and retest the 7,700 level.”

“The PSE still failed to maintain the 8,000 level. Investors will need better-than-expected earnings, inflation and gross domestic product figures to push the market this week,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

Combing through the earnings reports of last week’s early birds, COL Financial is recommending a buy on Union Bank of the Philippines as its earnings outperform on strong revenues growth while net interest income recovers as margin squeeze continues to reverse.

“Going forward, we expect the strong growth in the bank’s credit cards, mortgage, and commercial loans, coupled with declining funding cost, to drive the growth in the bank’s lending income,” COL said.

COL is also recommending a buy for Aboitiz Power Corporation below P37.90 per share due to a looming power supply shortage because seven new power projects may be cancelled or delayed due to a recent Supreme Court ruling affecting their power supply agreements.