The local stock market is seen to be weighed down by the extension of quarantine measures in the national capital region as well as by rising COVID-19 cases while several issuances may affect market liquidity.

“In general, the local market has shown bullish momentum in the past two weeks. The sustainability of its rally is at risk next week given the situation in the macro-environment,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “First, the extension of MECQ in the NCR and in other parts of the country is seen to weigh on sentiment since it is expected to widen our economic losses.” “At the same time our daily new COVID-19 cases remain elevated. If the daily new case counts continue with its uptrend next week, then it may put downward pressure on the market,” Tantiangco added.

Investors may also watch out for the upcoming IHS Markit Philippines Manufacturing PMI for clues on how the economy is faring.

BDO Chief Market Strategist Jonathan Ravelas said that, while local investors accumulated blue-chip counters led by the telco, retail and conglomerate sectors on improved earnings outlook, “the rising new infections arising from the delta variant may limit the market’s rally.”

“Interestingly, local equities seem little disturbed by the near-term spike in daily COVID cases, judging by elevated volume flows last week,” said online brokerage firm 2TradeAsia.com.

It added though that, “Whether this trend can be sustained is the question, however; note upcoming corporate events, ranging anywhere from REIT and preferred share listings to bond issuances and stock rights offers.”

“While we remain confident that there is enough liquidity to go around, brace for some flow tightness in issues that share industries with entrants; although in the grand scheme of things, firms looking to the market for capital should signal optimism over the next 6 to 12 months,” 2TradeAsia.com said.

“Last week’s close at 6,786.62 signals the market still has some gas to try the 6,850 to 6,900 levels in the near-term. Failure to test said levels could trigger some profit taking,” Ravelas said.

With the rally of the telecoms sector last week, Abacus Securities Corporation has decided to upgrade Ayala Corporation to a “Trading Buy” due to the rising market price of subsidiary Globe Telecom.

Apart from the higher net asset value because of Globe, Abacus has also included the value of the conglomerate's direct stake of 5.9 percent in Mynt which owns GCash.

“Based on our calculations therefore, Ayala Corp's net asset value per share has increased by P84.00, mostly because of Mynt, in the last 2 weeks alone... this is based on a Mynt valuation of $2.0 billion which we believe is the appropriate figure given the fintech hasn't even completed its latest funding round yet,” it noted.

Meanwhile, COL Financial has a Buy recommendation on almost the entire banking sector (except for Union Bank) due higher earnings in the second quarter because of lower provisions and higher fees.

COL also has a Buy recommendation for cement firms Cemex Holdings Philippines Inc. and Eagle Cement Corporation after the all cement firms registered higher profits in the second quarter due to easing restrictions on construction and cement producting compared to last year.