This week, investors will be taking cues from corporate earnings reports, hints on local and US policy rates, and the government’s decision on whether to further relax quarantine restrictions.
“The government’s decision on the alert level restrictions in the country for the 2nd half of February is seen to play as an important factor in next week’s trading,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He noted that, “If restrictions are eased especially in the National Capital Region, the local bourse could be able to return above the 7,300 level.”
“Aside from this, the market may also take cues from the Bangko Sentral ng Pilipinas’ policy meeting next week. Investors are also expected to watch out for upcoming corporate earnings reports,” Tantiangco added.
However, he said, downside risks remain due to worries over the hawkish outlook of the Federal Reserve’s policies and the ongoing tension between Russia and Ukraine and its consequences including the rise in global oil prices.
“These are seen to make it challenging for the market to do substantial rallies,” Tantiangco said.
Online brokerage 2TradeAsia.com said “Local watchers will place important premium on the BSP's first policy meeting of Feb. 17.
It noted that, “despite reassurances that tightening would not come until much later in the cycle, there will be increased pressure on this end, particularly amid the onset of summer season coinciding with the elections (seasonal drivers of major CP1 baskets).”
“We reiterate that the chances of being sucker-punched by an earlier-than-expected rate adjustment (within the first half of 2022) is low at this point, but prudence dictates some lightening towards rate-sensitive and hypergrowth sectors and switch towards cash flow hedges (dividend plays and REITs),” 2TradeAsia.com advised.
BDO Chief Market Strategist Jonathan Ravelas said that, “While there are companies reporting good earnings, there are risks that cannot be disregarded like rising U.S. interest rates, oil prices and inflation.”
He noted that, “With the market's failure to stay above the 7,500 levels, we are bound to consolidate anew within the 7,000 to 7,350 levels. However, should the sell-off continue, strong support lies at the 6,950 to 7,000 levels.”
With the recent rise in metal prices, COL Financial is recommending a BUY for Nickel Asia Corporation’s stock as it believes nickel prices likely to remain firm this year and revenues will be higher.
The firm’’s planned expansion of its renewable energy portfolio is also seen to boost its revenues.
Uncertainties raised by the Indonesian government’s plan to impose an export tax on some nickel products along with the rising demand for nickel due to the electric vehicle boom globally are seen to allow nickel prices to remain above $10 a pound for this year.
Meanwhile, Abacus Securities Corporation said “The recent weakness in Manila Water Company’s share price due to expectations of a water shortage by April may be an opportunity to accumulate the stock.”
The brokerage noted that, water utilities are better prepared for low water levels this year and have already tapped additional water resources, including deep wells, to augment supply in the summer months.
Abacus also said that, “Petron Corporation might be worth a trade as refining margins are at their highest in a long time” and its earnings may surprise to the upside for the fourth quarter of 2021 and and the whole of 2022.”