Trading at the stock market this week will be influenced by the COVID-19 situation as well as the release of key economic data by the Philippine and US governments.

“Next week, investors are expected to monitor our COVID-19 situation following the recent rise in case counts, and the detection of more cases with the infectious Delta strain,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “A sustained surge in our COVID-19 case counts, and a detection of more Delta variant cases may cause a decline in the local bourse since it raises the risks of prolonging the strict quarantine measures in the parts of the country where it is implemented including the National Capital Region, and possibly extending it to other areas.

Tantiangco added that, “Investors are also expected to watch out for our second quarter GDP data to be released on August 10.”

“A high growth figure is expected due to low-base effects. Thus, if a slow year-on-year growth is seen for our economy in the second quarter of 2021, then it may also give rise to negative sentiment in the market,” he added.

Tantiangco said investors are also expected to watch out for the remaining second quarter 2021 corporate reports to be released.

“The 14-day lockdown is seen to bite into earnings for the third quarter, but will likely not cause fundamentals to regress to the worst-case April 2020 situation (where operational days are virtually zero),” said online brokerage firm 2TradeAsia.com.

It added that, “The impact to earnings per share projections will be dependent on whether or not the Delta variant transmission will be controlled during this 2-week window, knowing that ASEAN neighbors Thailand and Vietnam have to extend their lockdowns to about 4 to 6 weeks.” 

“Volatility is expected to glide in upcoming sessions, as crucial macro numbers trickle in: confirmation for the country's second quarter GDP (August 10) will be followed by US consumer price index report (August 11), which will be a key input for the Fed's policy decision ;in the coming weeks,” the brokerage said.

It noted that, “Despite these being secondary to delta variant pressure, any improvement on the macro front should at least ease some of the downside risk on year-end projections.” 

Meanwhile, it noted that, “The PSEi basket reshuffle is expected drive volatility as funds rebalance their holdings.”

 It advised investors that, “In the face of broad market uncertainty, opt for modest gains on intraday strength, as the public digest the business to for the remainder of the third quarter.”

Top online brokerage firm COL Financial has a BUY rating for Cemex Holdings Philippines because “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 also like Pilipinas Shell “given its new operational strategies and initiatives to reduce carbon emission. The shift to full importation model is a practical move given the persisting supply demand imbalance of refineries in the region.”

It added that, “We like SHLPH’s commitment to paying dividends to its shareholders. Furthermore, the company is relatively cheap compared to its regional peers.”

COL also has a BUY rating on BDO Unibank “as we expect it to be one of the major beneficiaries of the recovery of economic growth with its strong deposit franchise and liquid balance sheet.”

While there are headwinds such as the potential spread of the delta variant, COL said the increasing supply of vaccines as well as the acceleration of the government’s rollout will mitigate this risk.

“Moreover, the bank has also booked adequate provisioning over the past several quarters which should give the bank some leeway in case there will be an uptick in non-performing loans,” it added.

Abacus Securities Corporation said BDO’s latest earnings performance “underpinned our Buy call on the stock, despite the negative overall market sentiment of the past few weeks.”

“Notwithstanding the uncertainty amidst the threat of the Delta variant and another lockdown, BDO appears to be among those faring better among listed companies, with a recovery story that largely remains intact,” it noted. Abacus also favors Cirtek’s as its “first half earnings performance was well ahead of our own forecasts and supports management’s view that the company benefits from the global chip shortage.”