After breaching the 7,300 level, the local stock market is seen to test its strength further this week to see if it can reach the 52-week high of 7,432.40 for the Philippine Stock Exchange Index (PSEi).
“While last week’s rally could invite selling pressures, the market is still seen to have an upward bias as investors may continue to digest the improving economic outlook brought by the easing of restrictions in the National Capital Region,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He added that, “This upward bias could strengthen if our COVID-19 situation continues to improve. For this week so far, our new COVID-19 case counts have averaged 2,427 per day, below the preceding week’s average of 4,149.”
Tantiangco said investors "are also expected to watch out for our third quarter GDP data, as well as upcoming corporate earnings reports.”
Online brokerage firm 2TradeAsia.com, in the meantime, said that "should inertia prevail, the market is set to confront its 52-week high of 7,432. Range trading should hedge against this volatility, all the while keeping tabs on earnings reporters next week.”
BDO Chief Market Strategist Jonathan Ravelas also noted that, last week’s close at 7,340.77 “highlights the market momentum is gaining traction anew. Should this condition persist, it might try the 7,400 levels (or even the 7,432.40 intraday peak in January) in the near-term.”
He warned that, “Failure to test the said levels could prompt some profit taking.”
Another online brokerage firm COL Financial is recommending a BUY for Cemex Holdings Philippines after “increasing our gross margin forecast for 2021 to 39.0 percent and lowering our operating expenses estimate by 3.4 percent. These increased our 2021 net income forecast by 28.7 percent to P1.5 billion.”
It added that, “Despite rising costs, we remain optimistic on the construction industry’s recovery as the government ramps up infrastructure building and as property firms resume their deferred projects this year.
COL is also recommending Ayala Land Inc due to an upgrade in its fair value estimate “after factoring in higher estimate values for its mall and office segments.”
“We believe ALI is one of the main beneficiaries of the continued relaxation of the country’s quarantine restrictions through its malls, hotels, and residential segments,” it noted.
COL also recommends a BUY for PLDT due to a possible upside from PayMaya’s revaluation. “Assuming that PayMaya’s valuation is $1 billion or P50 billion, TEL’s 38.5 percent equity interest in the fintech is worth P19.3 billion. This translates to around P90 per share or 4.4 percent of TEL’s fair value estimate.”
“We continue to like TEL due to the strong growth of its mobile data business, dominant position in the home broadband business, and the growing fintech operations of PayMaya,” it said.
Meanwhile, Abacus Securities Corporation is rating Robinsons Retail Holdings Inc. a BUY as most of its product categories exhibited growth in same store sales last quarter led by drugstores and department stores.
“More importantly, officials said October saw double digit growth in non-essentials and that recovery rates will continue into next year. We therefore reiterate our Buy call on RRHI with expectations that growth will take hold in the current quarter and accelerate going forward,” the brokerage said.