Market to anticipate earnings


By James A. Loyola

With market sentiment seemingly improving with regard to concerns over the spread of the novel coronavirus, investors are seen to shift focus to early releases of 2019 corporate earnings.

“Some earnings may start coming in,” said Regina Capital Development Corporation Managing Director Luis Limlingan adding that, “the MSCI rebalancing announcement is also due in the middle of the week and may affect the local market.”

Aside from 2019 earnings reports, online brokerage 2Tradeasia said that, “sentiment would ride on the… recalibration of 2020 outlook, post-nCoV, Taal eruption, even ASF (African swine flu).”

“Also, market participants will heed for clues on sequels to China governments investment plans and pledges, given People’s Bank of China’s tighter control on liquidity, at least until the nCoV issue is adequately addressed,” it added.

The brokerage noted that, “While it is normal to err on the side of caution for now, it is also worth to consider reaping higher returns, ahead of the second quarter dividend season. Trade a range and position gradually on bargains with cash flows that have historically been resilient.”

BDO Chief Market Strategist Jonathan Ravelas said there may be “continued bargain hunting activities in the near-term and (the PSE index) may retry the 7,700 to 7,800 levels. Failure to clear the said levels could reignite the bear trades anew.”

Amid these trying times, Abacus Securities Corporation is recommending a BUY on AllHome Corporation which is already at bargain levels.

“Remember that compared to its peer, AllHome has more stores near the areas affected by Taal and may benefit more from reconstruction efforts,” the brokerage said.

Meanwhile, with recent developments at Manila Water Company, Abacus is recommending investors to pick up shares of its parent company Ayala Corporation instead of the water concessionaire’s.

“As long as the new terms to be imposed by the government on the water concessionaires are unknown, it is basically impossible to value MWC as well as Maynilad,” it explained.

It noted that, “On the other hand, we are more positive that AC’s stock price should benefit. While a potential change in control may mean Ayala is letting go of MWC at a discount, it may still come as a relief. After all, AC has already priced in a total loss and at least the regulatory overhang will be significantly lessened.”

Still with the Ayala group, top online brokerage COL Financial is rating Bank of the Philippine Islands a BUY because “We continue to like BPI because of its position to take advantage of the country’s healthy economic growth on the back of its strong and highly liquid balance sheet as well as its large branch network.”