Stocks to remain volatile, US markets to provide cues

Published March 29, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

This week, the market will continue to be volatile because of the continuing spread of COVID- 19 and investors will be taking cues from the US markets.

“Fiscal stimulus coming from the US government might seem to have been priced-in by the market, but investors might take a look on how the government controls, slow the pace or should I say flatten the curve of cases in US but also here in the Philippines,” said Philstocks Financial Research Associate Piper Tan.

Tan noted that foreign investors continue to flee from the local stock market even during the two day rally which saw a record spike in the main index.

“We think investors right now are looking right for short rallies since the market is very volatile and might remain volatile up until the end of March,” he added.

BDO Chief Market Strategist Jonathan Ravelas said last week’s rally, spurred by gains in the US, “is temporary since the pandemic is still spreading locally and globally.”

However, he said “Last week’s close at 5,266.62 highlights this technical rebound (dead cat bounce) has still some gas to try 5,500 to 5,800 levels in the near-term. Expect some profit-taking as we near said levels.“

Online brokerage firm 2Tradeasia said “investors are anticipating with bated breath if President Duterte would finally approve a larger fiscal stimulus bill, after Congress floated a $3.93 billion ap-propriation.”

It added that, “Sequel progress would likely dictate directions this week, as bears fight out with bulls whether the market has already hit its floor and climb, or otherwise.”

The firm noted,”Telco firms are set to benefit (at least in EBITDA terms) from Luzon’s Enhanced Community Quarantine… Globe and PLDT separately noted a sharp rise in data traffic month-to-date, with the latter pegging a 15 to 20 percent lift year-on-year.

“Finally, we underscore that Globe and PLDT have been go-to dividend plays prior to the pandemic; with positive outings in 2019, there is enough reason to believe that payout will remain at least unchanged, and the recent rout should materially offer higher yields,” 2Tradeasia said.

Abacus Securities also looks favorably at both telco stocks noting that “both firms will at least maintain the payouts in the past 12 months which means yields of 7.3 percent and 5.0 percent for PLDT and Globe, respectively.”

In addition, “Unprecedented monetary easing from the BSP means lower interest, especially when market volatility subsides. As fixed income yields fall, institutional funds may begin to switch to high yielding equities by the second semester.”

Meanwhile, top online brokerage firm COL Financial is recommending almost all of the top listed real estate firms Ayala Land, Filinvest Land, Robinsons Land, Megaworld and Vista Land; even though they will all take a hit because of the enhanced community quarantine in various parts of the country.

“Despite factoring in much more conservative assumptions in our earnings forecasts and fair value estimates, capital appreciation potential remains significant for most property companies that we cover as negatives are largely priced in,” COL said.