COVID-19 to continue infecting stock market

Published February 16, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The local stock market is seen to continue to be volatile this week, with investors reacting mainly to news on the spread or containment of Coronavirus disease-2019 (COVID-19).

“Support is now at 7,200. We’ll take cues from coronavirus updates, whatever earnings come out, remittances, and macro date from the US,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

Online brokerage 2Tradeasia said, “Hopes will remain high (that) new cases would likely peak this month before tapering-off in April… But until science comes up with a formidable solution, it is everyone’s guess when COVID-19 would recede.”

Thus, the firm noted that “risk aversion is in, albeit temporarily… money may be funneled towards fixed-rate assets for now, until risk-reward environment becomes amiable.”

“While the market is generally within a weak pattern, buyers may seek again prospective retracements near 7,000, given the bourse’s ability to recover. Scout for good entry points & aim for stocks with good dividend yields,” 2Tradeasia advised.

With bearish conditions prevailing in the stock market, new stock recommendations from analysts have begun to dry up. However, there are still a few which prices have fallen to levels that may be hard to resist.

Abacus Securities Corporation noted that, Cemex Holdings Philippines operating performance has improved.

“Operating income and EBITDA were strong, margins expanded and operating expenses were kept under control. Bottom line, the stock still looks cheap based on EV/EBITDA,” the brokerage said.

It also noted that, Puregold Price Club “is already trading at its cheapest since listing and is trading at a wide discount to closest peer.”

“The peso’s appreciation will fuel further margin expansion for (subsidiary) S&R. Lastly, the fear over COVID-19 is likely to boost same store sales growth for both brands in the first half,” Abacus said in recommending a buy on Puregold.