The local market is seen to make a healthy correction to digest strong gains made last week on the success of two COVID-19 vaccines and the surprise rate cut by the Bangko Sentral ng Pilipinas. 

“This week, we may see a pullback as investors book  gains out of the market’s 3-week rally. The local bourse may also test its initial support which is its 10-day exponential moving average currently at 6,922.88,” said Philstocks Financial Senior Analyst Japhet Tantiangco.

              He added that “Investors are expected to look towards the upcoming economic figures, including our October budget balance as well as our bank lending and money supply data for clues regarding our economy's current condition.”

              Tantiangco warns, a surge in COVID-19 cases here or overseas still pose a risk but further positive developments on vaccine candidates may keep the optimism in the market.

              With a vaccine close to being approved in record-time and few corporates starting to turn in a profit, online brokerage 2Tradeasia.com said “The tide is turning quickly, and while some correction is due, it's not bound to cut as deep.”

              Any concerted program (and plans) at the national level will be appreciated by the market, and will be crucial in turning valuations higher,” it added.

              With many firms reporting some recovery in the third quarter plus the prospect of a vaccine available by next year, stock analysts are becoming more optimistic and have begun to recommend more stocks.

              COL Financial has a BUY rating for First Philippine Holdings Corporation specially after increasing its earnings forecast for subsidiary First Gen Corporation. 

              “Given FPH’s 68 percent ownership in FGEN, we view FPH as a cheaper way to own FGEN. FPH is trading at a huge 60 percent discount to its market based net asset value,” the brokerage said. 

              COL is also recommending Vista Land & Lifescapes are raising its fair value estimate following the stronger-than-expected recovery of its residential sales and revenue, and the higher than expected rental revenues.

              “We are maintaining our BUY rating on VLL as we expected them to continue capitalizing on the current demand trends for horizontal projects. We also expect rental revenue to continue recovering going forward as quarantine restrictions ease in line with the declining number of new COVID-19 cases,” it added.

               COL also has a BUY rating on SSI Group even though earnings remain challenged amid the COVID-19 pandemic.

              “We believe this is already priced in by the market. Furthermore, the challenging earnings situation is only expected to be temporary, and sales are already gradually returning to pre-pandemic levels,” it noted.

            Meanwhile, Abacus Securities Corporation is recommending BDO Unibank which is among the laggards in the Philippine Stock Exchange index as it is seen to catch up eventually. 

“This will be triggered by higher profitability next year, in turn, will be driven by lower than expected provisioning. Currently, our view is that earnings estimates are very conservative but should ratchet up over the next six months,” it said.

                Abacus is also rating Alliance Global Group Inc. a BUY noting that, “As the economy opens up, recovery should continue for most of AGI’s units especially coming into the fourth quarter” adding that the stock is historically cheap.(James A. Loyola)