The local stock market will continue to be weighed down by concerns over rising interest rates and inflation although corporate earnings announcements may provide a silver lining for some sectors.
“Next week, the local market could move sideways with a downward bias as investors continue to contend with worries over aggressive monetary policy outlooks and their impact on the local economy,” said Philstocks Financial Research Manager Japhet Tantiangco.
He added that, “This comes amid an anticipated 75 basis point policy rate hike by the Bangko Sentral ng Pilipinas, and the continuation of the Federal Reserve’s policy tightening in the near future. Concerns over inflation following the 7.7 percent print for October may also weigh on sentiment.”
“Next week's US CPI data will help give a picture of whether or not the Fed can keep true to this ‘step-down,’” said online brokerage 2TradeAsia.com.
In light of the higher-than-expected October inflation rate, it noted that, “there should be some downward bias to linger in November as the impact of typhoon Paenq in the past week has yet to be reflected in agri commodities.”
“For context, 8 regions were ravaged with an estimated P1.33 billion in agricultural damages; this should further pressure retail prices considering November is also when prices adjust for holiday seasonal demand pickup,” 2TradeAsia.com said.
“On a positive note, optimistic anticipation of third quarter corporate results may provide support to the market. Investors are also expected to watch out for our third quarter GDP data for cues,” Tantiangco noted.
For stock picks, Abacus Securities Corporation has a BUY rating for BDO Unibank on account of the strong earnings growth it announced for the first nine months of the year.
“It was finally the quarter we thought the bank was capable of... Moreover, (BDO’s) performance would have been even better, and its ROE higher, had earnings not been dragged by trading losses amounting to P2.0 billion YTD,” it added.
COL Financial said “We are upgrading our fair value estimate on BDO to P160.00 per share (based on 1.35 times 2023 estimated book value) as we rollover our estimates to 2023.”
“We maintain our BUY rating and continue to like BDO as we expect it to be one of the major beneficiaries of the continued recovery of the economy and the rising interest rate environment, given its strong deposit franchise and liquid balance sheet,” it noted.
Meanwhile, COL said it is maintaining its BUY rating on Semirara in light of the increase in its average coal price estimate for 2023.
“We are raising our 2023 earnings forecast by 29 percent to P29.3 billion. Following the rolling forward of our estimates to 2023 and the increase in our earnings forecast, we are raising our fair value estimate of SCC by 5.1 percent to P50.25 per share,” it explained.
COL noted that, “We like 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 58 percent increase in SCC’s share price in the YTD period, the stock is still cheap.”
For its part, Abacus said that, “With projected capex for next year dropping to P5.7 billion from P8.8 billion this year, we believe SCC would remain to be a viable dividend play until next year. Those looking for yield should continue to hold the stock.”
COL also has a BUY rating on AboitizPower with a fair value estimate of P41.9 per share because “We like AP as we believe that the earnings recovery from the impact of the Covid-19 pandemic in 2021 can be sustained in 2022 with overall power demand expected to exceed pre-pandemic level.”