The local stock market is seen to try to build a base at the 6,600 level, although concerns remain over the weak peso as well as the high inflation and how the US Federal Reserve will address it later this month.
“Next week, the local market is expected to move sideways with a further testing of the 6,600 level. Investors are expected to take cues from the Philippine Peso’s movement against the US Dollar, as well as from other significant economic data coming next week,” said Philstocks Research Manager Japhet Tantiangco.
He added that, “investors are also expected to watch out for our upcoming OFW remittance, foreign direct investments, and balance of payments data for clues on the economy. Lingering worries over the recession risks in the US and in Europe may continue to weigh on the market.”
For its part, 2TradeAsia.com said “The market may remain range-bound as drivers to value, both off- and on-shore, are seen to fluctuate over the remainder of third quarter.”
“Quality of assets is underscored here, to reduce the impact of 'motion sickness' while the market attempts to base-build. If the market is able to hold its position at 6,600, this will be considered as its support while its immediate dynamic resistance is seen at the 200-day exponential moving average,” it added.
The brokerage said the outlook for the next quarter will depend on the Sept. 20 to 21 Fed meeting although “The Fed's strong messaging earlier this week regarding its stance against inflation drove markets to assume another 75-bps rate hike."
“As a result of historically higher benchmark rates, and among other factors, fears of a major slowdown in demand ultimately fan recession fears by as early as 2023,” 2TradeAsia.com warned.
It added that, “talks of recession (technically defined as a fall in GDP in two successive quarters) cannot be ruled out, and is part and parcel of living with protracted inflation and hawkish central banks.”
For stock picks, both Abacus Securities Corporation and COL Financial favor Semirara Mining and Power Corporation.
With gas supply from Malampaya getting lower, Abacus said this means “power reserves are likely to get thinner next year, especially in summer, and this will drive energy prices even higher. This will be good for companies like SCC that have high exposure to the spot market.”
COL said “We are maintaining our BUY rating on SCC given that we believe that the company is set to post record-high earnings this year due to the increase in coal prices. Despite the 96 percent increase in SCC’s share price in the year-to-date period, the stock is still cheap.”
Meanwhile, Abacus rates Bloomberry a Trading Buy after noting that “the Philippine gaming market has benefited from the waning business in Macau, as BLOOM saw a surge in the share of foreign patrons in its mass segment in the first half of 2022, adding that a mix of Koreans and Singaporeans are driving premium mass revenues.”
It added that, “the decision of several casino suppliers to jump ship (from Macau to the Philippines) suggests that the prospects of gaming businesses in the country have become more attractive.”