The local stock market is seen to remain weak, weighed down by recent bad news, although investors are seen to look for more cues from the release of more economic data as well as from the Bangko Sentral ng Pilipinas meeting on rates this week.
“Economic worries may con-tinue to weigh on investor sentiment following the recent disappointing narratives including S&P Global Ratings’ 9.5 percent Philippine 2020 GDP contraction forecast and downbeat results from the BSP’s latest business and consumer confidence survey,” said Philstocks Financial Senior Analyst Japhet Tantiangco.
He noted that these may extend the local market’s decline next week while trading could also remain anemic as many stay on the edge amid the market uncertain-ties.
This week, Tantiangco said: “Investors are also expected to look towards the upcoming bank lending and money supply data, IHS Markit Manufacturing PMI, and the BSP’s policy rate decision for clues regarding the local economy’s condition.”
Meanwhile, Abacus Securities Corporation warned that market liquidity may begin to ebb with the recent approval of the initial public offering of broadband provider Converge ICT worth up to P41.5 billion.
“The upcoming IPO of Con-verge ICT may start to affect trading in the next two weeks. The size is relatively large compared to recent offerings and may induce selling as investors build up cash,” the brokerage noted.
Online stock broker 2TradeA-sia.com noted that investors may also be looking forward to recovery in third quarter earnings. “Niche sectors that have significantly utilized capacity in the third quarter relative to the second quarter, such as provincial real estate, infra, and logistics, may be worth considering in the medium term,” it added.
“Fundamentals are clearly still in play and, as such, it would be wise to look past the volatility, towards the next angle on fundamentals: 2021's recovery. Gradually accumulate on dips,” it advised.
While there are not that many stocks to recommend these days, Abacus noted that investors may start to buy shares of Ayala Corporation whenever its price dips as it will be “plugged into any economic recovery” given how broad its business interests are.
Abacus said the deterioration in Ayala’s stock price “has gone far enough and may have been exaggerated by recent regulatory and political overtones.”
“It is unfortunate but it provides investors with a better entry point…we believe it now offers much better value compared to a few years ago and especially to some of its peers,” it added.
For COL Financial, shares of Semirara Mining and Power Corporation are worth buying despite the poor earnings outlook of the company this year owing to falling coal and power rates and higher than expected instances of unplanned power outages.
“We believe that much of the negative news is already priced-in. The stock is the cheapest among all power companies…based on our earnings forecast,” it added.
COL explained that, while coal prices remain low, Semirara’s profits is set to improve due to higher production volume while its power generation business is also set to improve owing to better plant availability and the higher contracted capacity level of its power plants.