The local stock market is seen to remain cautious this week as jittery investors wait for more news about the new South African COVID variant that may have the potential to again shut down the global economy.

“For next week, investors may trade more cautiously amid resurfacing COVID-19 worries,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “Sentiment could be weighed by fears over the new COVID-19 variant, Omicron, and the possibility of it bringing another wave of infections around the world.”

“At the same time, investors are expected to watch out for the government's decision on the social restriction measures of the country by December,” Tantiangco added.

He said “Investors would be watching out for what the government's strategy would be on the reopening of the local economy in light of the new COVID-19 variant of concern.”

Online brokerage firm 2TradeAsia.com said that, with the threat of the new variant, “relaxed policy measures—such as allowing minors more mobility and schools to reopen—will be put into question, as these will make the management of a would-be case spike much more difficult.”

“More visibility on the new variant will be paramount for players aiming to position ahead of 2022, as this might spell the difference between going full blast for cyclicals versus putting defensives and lockdown plays as solid alternatives (for early 2022, at least),” it added.

However, 2TradeAsia.com said “Not all is gloom and doom, contrary to the PSEi's almost range-bound movement in the past two weeks. For one, the IPO mart has never been this busy in years, and capital-raising is keeping up with M&As, a welcome shift after a year of righ-sizing.”

Additionally, it said “Consumer spending ramping up during the holiday season plus lower year-on-year base means elevated earnings expectations for the fourth quarter which might also push for a late-year accumulation.”

The brokerage warned investors to “Brace for aberrations in volume, as the IPO pipeline is yet to be exhausted.”

BDO Chief Market Strategist Jonathan Ravelas said last week’s close at 7,278.44 highlights the market’s inability to sustain gains above the 7,350 to 7,425 levels.

“Expect the market to consolidate within the 7,200 and 7,400 levels in the near-term. A break below the 7,200 level will signal a near-term top is in place at 7,475.75 (Nov. 10 high) and may see further losses towards the 7,000 levels,” he noted.

Both Abacus Securities Corporation and COL Financial are keeping an eye on developments at newly-listed The Keepers Holdings Inc. because of a potential acquitision.

“Our studied opinion is that management will soon close a deal to acquire Williams & Humbert (W&H) which produces Alfonso Brandy, among others. Mr. Lucia Co already personally owns a 30 percent stake in W&H which he bought in July 2018,” Abacus said.

It noted that, “The acquisition makes sense because KEEPR has to secure the supply of its most popular product. We also expect significant cost savings and synergies after the acquisition.”

“This is a theory but if we are correct, this should further enhance the value of the stock. Buy KEEPR,” said Abacus.

Citing “new sources,” COL also said “KEEPR is expected to use bulk of its proceeds from the follow-on-offering to acquire Bodegas William & Humbert (W&H).”

“We believe the discount between KEEPR as a pure liquor distribution business could narrow relative to Emperador if it acquires W&H,” it added.

Meanwhile, COL is favoring Alliance Global Group Inc., GT Capital Holdings, LT Group, and Metro Pacific as these are laggards in the reopening play.

“For the past few weeks, the PSEi has been gaining traction on the back of loosening of quarantine restrictions and the encouragingly lower COVID-19 cases nationwide. Many blue-chip holding companies such as AC and SM led the promising price action of the PSEi,” COL said.

It noted though that, “other holding companies remained sluggish despite their improving fundamental outlook and cheap valuations. Given our view that they will most likely catch up with their larger capitalized peers, we find AGI, GTCAP, LTG, and MPI extremely attractive as the country returns to normalcy and the stock market enters a new bull trend.”