By James A. Loyola
With less than 10 trading days remaining in the year, no more market-moving economic data is expected to come out with investors now left to wait and see how the US-China trade negotiations will continue to develop.
“Not much economic data is scheduled to be released, so direction will be event driven for now,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
He noted that, “market seems to have gotten a bit of a boost from the preliminary deal between US and China. Should both parties rollback on the tariffs, this could continue with the positive sentiment and build momentum for a year-end rally.”
Online brokerage 2Tradeasia said that, “with the US Fed and local central bank's status quo on monetary policy already factored into share prices, participants will be heeding to December 15's US tariff deadline on Chinese imports that is seen to be preceded by an announcement on phase 1 of US-China trade pact.”
“Overall, an expected 'Santa Claus rally' might still be possible, in case US-China surprise markets for a truce to get phase one of the deals moving.”
Thus, 2Tradeasia advises investors to start shopping for bargains, noting that “Several large caps were beaten during the rout, and have regressed from their highs. These are trading at significant bargains relative to earnings potential, amidst challenges prevailing within their respective industries.”
It added that, “With the current liquidity in the system, now is the best time to shop for bargains, ahead of the Philippines’ economic growth story for 2020 and legislative measures that should merit long-term investors' attention (cut in corporate income taxes, REITs).”
“We see bright spots in property, services, energy, banking and infra-based construction for those eyeing long-term returns, and potential V-shaped recovery for mining & oil or mineral exploration,” 2TradeAsia said.
Looking at value plays, COL Financial is recommending a BUY for Robinsons Land Corporation due to its strong third quarter earnings growth while earnings outlook for 2020 is also very attractive.
This is largely driven by the recognition of more revenues from its Chengdu project, booking of revenues from its successful joint venture with Shang properties in BGC, change in residential revenue recognition policy coupled with strong take up sales of domestic projects, and a pick-up in hotel profits.
Among stocks trading below book value, Abacus Securities is recommending First Philippine Holdings Corporation, noting that its return on equity is double cost of equity while its current price still trades significantly below its net asset value.
Abacus also likes Filinvest Land as “the stock trades at a huge discount from its book value.” The stock brokerage firm also expects FLI’s major project in New Clark City to benefit from improving infrastructure that would help facilitate transportation.
It is also recommending a trading BUY for Philippine National Bank because of the turnaround the bank is enacting by earning more sustainable core banking income than income from exhaustible asset sales.(James A. Loyola)