This week, stock market investors will be watching out for three key government announcements on the quarantine classification as well as the latest inflation and unemployment data.
“The local bourse may take cues from the government’s decision regarding the quarantine classifications of the country after September 7,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He noted that, “Last week’s positive performance is seen to be reflective of investors’ hopes towards the further easing of restrictions primarily in the National Capital Region, the biggest contributor to our economy region-wise.”
“Meeting these hopes next week may strengthen the local market’s upward momentum. Failing the hopes by maintaining the current measures may lead to a pull back however,” Tantiangco added.
Investors are also expected to watch out for the upcoming July labor force survey and August inflation data for clues on how the economy is faring.
“Macroeconomic data releases in the coming week are expected to sustain interest in risk assets, which can make or break purveyors of the ‘PSEi can hit 7,000' rhetoric,” said online brokerage firm 2TradeAsia.com.
It pointed out that, “Inflation and unemployment data are especially crucial heading into final stretch of the year. After reaching a year-to-date high of 4.7 percent, 2TradeAsia.com said inflation fears may have cooled down after lockdowns have stymied demand for basic goods.
“However, rising fuel prices and agri and construction supply woes during the rainy season may bring surprise upward pressure by the fourth quarter,” it warned.
Meanwhile, 2TradeAsia.com said recent subpar factory data may be indicative of non-exciting news on the labor front; thus, anything other than a big slide in labor numbers will he taken positively, given recent slew of lockdowns hitting corporates.”
The brokerage also noted that, “there has not been any significant volume 'dilution' (despite several stock and bond offerings ongoing). This supports most issuers' views that there is more than enough liquidity to soak up this 'spike' in private sector financing.”
“With even more liquidity in circulation expected in the coming quarters (holiday and election spending) there may be reason, to frontload on cyclicals while valuations are still on the low-end,” 2TradeAsia.com advised.
BDO Chief Market Strategist Jonathan Ravelas said last week’s close at 6,897.13 “signals the market still has some gas to try the 6,900-7,000 levels in the near-term. Failure to test said levels could trigger some profit taking.”
He cautioned that, “the rising new infections arising from the delta variants may limit the market’s rally.”
Meanwhile, Abacus Securities Corporation is recommending a BUY for LT Group because it believes the firm’s biggest foreign seller “looks to have almost sold all of its shareholdings of the stock.”
“Based on what we saw, one foreign broker has sold (on a net basis) close to 165 million shares of the company in the past 3-plus months. From Bloomberg, we then saw that one foreign shareholder owned 166 million shares as of end-May. It is not guaranteed but IF this is the fund that has been selling down its position in LTG, then it only has about 1 million more shares to sell and this should take only a few more days to finish," Abacus said.
It explained that, “At its current forward price to earnings ratio) of 3.2 times, LTG is only fractionally more expensive compared to its pandemic low (when the market crashed on March 19, 2020) of 2.8 times.”
Abacus is also reiterating its BUY recommendation for AllHome Corporation because management expects a jump in profitability next year or as soon as the fourth quarter possibly due to its rapid store expansion.
While management did not say why it expects a profit jump, the brokerage said “this may be due to expectations that the stores opened during the company's rapid expansion in the past few years will finally mature. Whatever the case may be, such comments cement our positive outlook for the stock.”
Meanwhile, COL Financial is recommending a BUY for Petron Corporpation despite weaker-than-expected first half results because, “While there may be a few setbacks from the re-imposition of stricter quarantine measures, we think that fuel demand is generally sustainable as key industries and public transportation remain operational.”
It added that, “we think that volumes will eventually pick up again with the easing of restrictions and as more people get vaccinated.”