Stocks to weaken early this week, may gain before weekend

Published November 24, 2019, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The market is seen to continue to slide early this week but will hopefully post some gains as the month comes to an end.

“In the first half of the week, there may be some continued selling and repositioning ahead of the MSCI rebalancing. Afterwards we could see some window dressing to close out the month of November,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

He noted that the market has been getting mixed signals regarding the progress of US-China trade talks as China is open to more negotiations but is strongly opposed to a bill on Hong Kong set to be signed by US President Donald Trump.

BDO Chief Market Strategist Jonathan Ravelas said the market had failed to sustain its rally above the 8,000 level and its downward momentum is accelerating.

“Look for a test towards 7,700 should a break of 7,800 levels occur in the near-term,” Ravelas said.

In the meantime, investors continue to chew on recent earnings reports in search for stocks with good fundamentals that have seen their prices decline to more attractive levels.

Online brokerage firm COL Financial continues to recommend investors to buy Semirara Mining and Power Corporation shares despite weak coal prices and recent mining suspensions.

“While near term sentiment may not improve… we believe that much of the negative news is already priced-in,” COL said adding that “the stock is also the cheapest among all power companies… and capital appreciation potential remains significant.”

COL also recommends a buy for Alliance Global Group Inc. following its favorable nine-month income report. “AGI’s share are priced at a 47.7 percent discount to its market price-based net asset value of P21.76. We believe at this price the market has factored in much of the downside for AGI,” it added.

For its part, Abacus Securities also noted that AGI’s McDonald’s business has posted sequential growth in same store sales for the past two quarters–in stark contrast to nearly all restaurant or retail stocks that posted weak or weaker same store sales growth in the third quarter.

COL also like Cosco as it remains severely undervalued with the market not valuing its other businesses (apart from Puregold) like the liquor distribution and real estate business.
“If we only value COSCO for its 49 percent stake in PGOLD based on the latter’s market value, this still translates to a target price of P8.90 per share, presenting a 29 percent upside to COSCO’s current price,” noted COL.