Movements in the local stock market this week will continue to be influenced by the US elections as well as the announcement of the third quarter economic performance and more corporate earnings releases.
“Headlines on the US presidential race should remain a volatility churner in the corning sessions, given the narrow margin, negative reaction from the trailing party, and relative impact of either Biden or Trump winning but with a GOP-1ed Congress,” said online brokerage 2TradeAsia.com.
Investors will also be waiting for the announcement on November 10 of the Philippine’s gross domestic product for the third quarter of the year to see if the economy is recovering.
More firms are also expected to report their third quarter performances this week as the deadline for the submission of third quarter financial statements is just a few days away.
According to 2TradeAsia.com, “Nearly 85 percent of PSEi constituents have reported nine month earnings and, as expected, the numbers left little to be desired on year-on-year terms, but are significantly better sequentially.”
The brokerage advised investors to continue to accumulate stocks, pointing out that, “while COVID-19 has long-lasting effects in both the economy and corporate earnings, but in itself, is not permanent.”
Meanwhile, BDO Unibank Chief Market Strategist Jonathan Ravelas noted that the PSEi is at its resistance level after rallying due to “improving economic activity supported by slowing daily infections and prospects of further easing restrictions in the first quarter of 2021.”
“Last week's close at 6,685.69 shows some minor profit-taking after testing the 6,700 levels. Expect the market to range within the 6,300 to 6,700 levels in the near-term. Next resistance for the market is pegged at 6,900,” he said.
Whether President Donald Trump stays for four more years or Joe Biden boots him out of the White House, Abacus Securities Corporation expects the US electric vehicles market to post strong growth and the Ayala group’s Integrated Microelectronics Inc. (IMI) is seen to benefit.
“We have said before that we like to invest in companies that benefit from mega trends. EVs are one such trend that is nearing an inflection point and sales will grow spectacularly over the next decade or so,” said Abacus.
It noted that, “This is regardless of who wins the US election but EVs may get a shot in the arm if Biden wins.” Thus, IMI is a good long term bet to profit from this mega trend.
Meanwhile, both Abacus and COL Financial are rating Metro Pacific Investments Corporation a BUY because it is very undervalued.
“We still see value in holdings the stock as its market price trades at a wide discount to its net asset value,” Abacus said adding that MPIC’s buy-back program should lend near-term support to the stock.
For its part, COL said that, “While near term sentiment on MPI will most likely remain negative due to the uncertainties on Maynilad, we believe that concerns are overblown given MPI’s depressed valuation.”
It explained that, “Based on MPI’s current market price of P4.00 per share, the company is trading at a 49 percent discount to its NAV which implies that Maynilad and its toll road business are already worthless.”
COL added that, “MPI is trading at par to its 46 percent stake in Meralco, and 20 percent stake in the hospital business. COL is also recommending China Banking Corporation after upgrading its fair value estimate. It said that, while the bank’s earnings will be hurt by the COVID-19 pandemic and the lockdown, the negatives have already been priced-in and, at its current price, the stock is very cheap.