Bargain hunting seen this week

Published January 26, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The local stock market is seen to benefit from some bargain hunting this week although volume may be lower due to the Lunar New Year holiday.

“While attention might sway with current socio-political head lines, the timing appears ripe to gradually accumulate on large caps that have already breached attractive buy levels. Remember that recovery follows after the dust settles, especially for stocks with solid upside prospects,” said online brokerage firm 2Tradeasia.

Overseas, 2Tradeasia said the Federal Reserve will hold its first meeting for the year with consensus on possible status quo.

This would be supported by the steady rise in housing construction starts plus jobs data growth, as earlier apprehensions on the trade accord are appeased.
“Expect volatility as the issue on President Trump’s impeachment unfolds, including remedies to contain the spread of a new strain of coronavirus,” it said.

The brokerage noted that, “participation could recede, with most Chinese investors on their Lunar New Year break.”

BDO Chief Market Strategist Jonathan Ravelas said last week’s close at 7,623.41 highlights some buying support emerging below the 7,500 levels.

“Continue to see market to range between the 7,500 to 7,700 levels in the near-term. However, a significant break below the 7,500 will reinforce previous view calling for a test of the 7,000 to 7,300 levels,” he added.

Online brokerage firm COL Financial is recommending a BUY for Ayala Land, Inc. shares despite recent attacks on its lease of property from the University of the Philippines.

“Although we believe that the contract between ALI and UP will not be renegotiated, it is still important to point out that the UP-ALI Technohub is just a very small part of ALI,” COL said.

COL estimates the profit contribution of the UP-ALI Technohub is just 3 percent while its contribution to net asset value is around 1.7 percent.
The recent drop in ALI’s share price is seen by COL “as a buying opportunity for ALI as the decline in its share prices now gives it a 30 percent upside to our fair value estimate of ₱53.00.”

While Abacus Securities is not recommending the stock in light of poor sentiment, it noted that “ALI is just trading in line with the market and is no longer in the top quartile among index members in terms of valuations.”

Abacus said ALI should still command a premium over its peers based on its track record, breadth or depth of projects and strong management team.

COL is also rating PLDT a BUY “because of their various initiatives to increase mobile data revenue and enhance home broadband services, allowing profits to return to a sustainable growth trajectory.”

It also noted that PLDT is trading below the regional average and that its capital appreciation potential is also attractive.