Stocks to take cues from Fed, BSP meetings

Published September 19, 2021, 7:00 PM

by James A. Loyola

At the stock market this week, investors will be looking out for the result of the US Federal Reserve meeting on rate policy as well as the Bangko Sentral ng Pilipinas’ own meeting.

“The Fed is expected to convene and update watchers on its rate policy changes, if any at all (minutes out September 23), which should provide some jitters across the globe with the Fed already communicating some tapering and policy rate modifications are on the horizon,” said online brokerage 2TradeAsia.com.

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It added that, “This is in the context of slower-than-expected recovery numbers from labor to inflation, with the COVID rhetoric being held back by the Delta variant even in developed economies.”

The meeting will provide an outlook for when the eventual tapering will trickle in; ultimately, the BSP, with the rest of regional central banks, would have to play the role of balancer to mitigate the impact of a slightly hawkish Fed.

“In that case, market watchers will be glued to the BSP’s own meeting late net week; although with consensus on the ground staying strong on a sustained accommodative policy, any messaging outside of rate hilcies will likely be shrugged off by equities,” 2TradeAsia.com noted.

The brokerage sees the market going sideways with an upward bias as third quarter earnings are within earshot and are expectedly to go better on year-on-year comparisons alone.

It added that there are “pending catalysts that can push market conviction to a much higher terrain, such as macro stimulus programs from the fiscal side or a comfortable downtrend in COVID infection numbers.”

Philstocks Financial Senior Supervisor for Research Japhet Tantiangco added that, “Mounting global economic worries amid the lingering challenges posed by the pandemic may weigh on the local bourse.”

2TradeAsia.com also warned investors to “Brace for some supply pressure as the market psyche remains mostly hesitant, on top of the usual volume flows being warped by a deluge of IPOs and other capital issuances.”

BDO Chief Market Strategist Jonathan Ravelas said last week’s close at 6,912.85 signals the market’s failure to sustain the rally above the 7,000 levels.

“Expect a retest of the lower end of the consolidation range (6,700 to 7,000 levels) at 6,700 levels,” he projected.

Meanwhile, Philstocks is recommending investors to buy Ayala Corporation which is refinancing $400 million in US dollar-denominated notes which will allow it to get lower rates and decrease its overall cost of debt.

“Recently, the share has been testing the upper bound of its 800.00 – 820.00 resistance range while being supported by its 10-day exponential moving average,” said Tantiangco.

He added that, “If it completely takes the said range and establishes position there, AC may target next its minor resistance at 864.00.” For its part, Abacus Securities Corporation said Semirara is set to benefit from higher electricity rates as well has rising coal prices.

Power rates are seen to go up due to the absence of gas supply from Malampaya while coal prices has come roaring back because of high energy demand in China and may increase further if the country experiences a colder than usual winter.

Abacus noted that the follow-on offering of The Keeper Holdings Inc., the liquor unit of tycoon Lucio Co, has become more attractive after it’s price was adjusted from P2.95 to P12.82 last week.

“This significantly increases the attractiveness of the planned follow on offering which is scheduled to push through next month or in November. Of course, the stock price will immediately correct closer to the offer price (currently pegged at between P2.00 to P2.50) but as we said previously, we find the range reasonable. As such, we believe that KEEPR will remain above the final FOO price, whatever it may be,” it added.

 
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