The local stock market is seen to be weighed down by expectations that the US would still raise its rates aggressively to tame inflation although the release of more economic data is also seen to influence the movement of share prices.
“The local market is expected to trade with a downward bias next week, especially in the earlier part, as investors digest Federal Reserve Chairman Jerome Powell’s hawkish remarks at the Jackson Hole Symposium,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He noted that, “Fed Chair Jerome Powell’s speech hints that the US’ monetary policy may continue with its aggressive raising of interest rates which in turn is seen to have a negative effect on the Philippines’ foreign capital flows and local currency.”
“Investors are also expected to watch out for the upcoming bank lending data and S&P Global Philippines Manufacturing PMI for clues on how our local economy is faring,” Tantiangco added.
Online brokerage firm 2TradeAsia.com said “A busy week for global data is upcoming, mostly as the market attempts to read the tea leaves on the US Fed's subsequent policy moves where consensus has been unanimously strong on policy direction in the past few months, views on whether rates will continue its upward trek are now getting mixed.”
“The silver lining is that past the lumpy outlook for the second half, 2023 remains a solid anchor fundamentally, based solely on improving commodity supply data in most of the west, China flooding its system with stimulus, and the local 2023 budget looking to focus on food security and infrastructure that may relieve some of the purchasing power burden at the household level,” it added.
2TradeAsia.com warned that, “With the benchmark index at an identity test' towards 7,000, brace for bouts of selling pressure from hands looking to make a quick buck of the market's mood and momentum (both notably absent in the past quarter).”
For stock picks, Abacus Securities Corporation favors ICTSI because its second quarter and first half earnings were strong and yet it is now cheaper than its pre-pandemic price which make the stock a bargain.
“We believe that the momentum will carry over into the next few quarters. It’s yield per TEU has risen significantly over the last few quarters and favorable regulatory conditions on this end could drive further growth,” it added.
Meanwhile, Abacus is raising its price target for SPNEC to P3.28 per share, almost double its last closing price and a big leap from its previous target of P1.96. Third party valuation also puts SPNEC’ price at P2.50 per share.
However, Abacus noted that its previous price target was before the planned acquisition by SPNEC of all the assets of Solar Philippines while the third party valuation of P2.50 which was based on data as of December 31, 2021.
“We believe this is justified because the latter does not yet take into account the off-take agreements related to: a) Terra Solar, b) the GEAP, and c) the recently disclosed original proponent status for SP’s Batangas Baseload Plant,” it explained.
COL Financial has a BUY rating on Max’s Group and will be reviewing its estimates given the firm’s stronger-than-expected second quarter results.
“We expect MAXS to benefit from the resumption of full-capacity dine-in amid eased restrictions and the seasonal increase in consumer spending this coming second half,” the brokerage said.
COL also has a BUY rating on PNB which it views as a “deep value play” adding that, “We expect loan growth to improve as the economy continues to recover and as the bank continues to build up its portfolio in the second half of the year.”