Virus fear reigns over stock market

Published March 1, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

While markets worldwide may have oversold stocks and brought them to very attractive levels, the fear of COVID-19 is still seen to reign over investor sentiment this week and may even overshadow corporate earnings and macro-economic figures to be announced by the government.

“The PSEI is already at oversold levels and this could compel a few episodes of bargain hunting backed by 2019 corporate earnings,” said Philstocks Financial Senior Research Analyst Japhet Tantiangco.

He noted though that “if there won’t be any positive developments against the spread of the COVID-19, then the local market will still be biased to the downside.”

Regina Capital Development Corporation Managing Director Luis Limlingan said that, aside from Coronavirus updates, the market will also be taking cues from local inflation numbers and the release of banking data.

“Manufacturing PMI data will also be out and this may disappoint us especially that of China in light of the ongoing health crisis. We’ll also be having our local inflation rate which would give us a hint of how our economy is faring amid the lag effects of the Taal volcanic activity and the preliminary effects of the COVID-19,” added Tantiangco.

Online brokerage 2Tradeasia is more optimistic and pointed out that, “Valuation angles on listed firms fundamental core have become cheaper each day and upswing opportunities await.”

“Bottomline, the global financial system is awash with cash and is just waiting for the proper time to make a comeback. Start shopping gradually and mix portfolios with stocks that have good dividend track record,” it advised.

With so many stocks falling due to COVID-19 fears, top online broker COL Financial is still recommending a BUY for Cebu Air despite an expected reduction in earnings as pandemic has resulted in a drop in the number of passengers.

“Despite the weaker earnings outlook in 2020 and 2021, we believe CEB’s long term prospects remain favorable. We believe the company is poised for growth given the increasing demand for travelling,” COL said.

It added that, “CEB’s fleet/capacity expansions, and shift to more fuel efficient aircrafts should improve operations and in turn boost its earnings.”

COL also has a BUY rating on another Gokongwei company, Universal Robina Corporation, because “We believe URC’s prospects are brighter this 2020 coming from an inflection point in 2019, as profits have started to grow, arresting the decline over the last three years.”

The brokerage also recommends Concepcion Industrial Corporation “for its strong growth prospects given its market leading position in the underpenetrated air-conditioning and refrigerator markets and increasing share in the fast-growing laundry market.”