While local stock market players usually hope for a “Santa Claus rally” before the end of the year, the outlook for this week seems gloomy as US bourses continued to drop.
Market pundits are hoping fund managers will start window-dressing stocks in their portfolio to come up with a rosier picture by the end of the year.
However, growing fears of a recession in the US because of high inflation rate, which results in rising interest rates, as well as prospects of flat or low economic growth, higher unemployment, and lower consumer spending.
However, Philstocks Financial Research Manager Japhet Tantiangco said “We may see bargain hunting next week following this week's decline. However, the market is still expected to go through a rough patch as monetary outlooks weigh on growth prospects which in turn may still cloud sentiment.”
“The Federal Reserve's policy outlook poses recession risks on the US which may spill over to the rest of the global economy. Meanwhile, the Bangko Sentral ng Pilipinas which is still on a tightening path may slow down our local economic growth,” he noted.
Abacus Securities Corporation said “The PSEI index has cooled off after jumping more than 1,100 points to 6,800. Equity prices need to consolidate some more and we believe it will go sideways until the end of the year.”
For stock picks, Abacus is looking at firms that will benefit from the resurgence of tourist arrivals which is expected to boost hotel occupancies especially during the holiday season.
Among real estate firms with hotel and resorts businesses, the brokerage said Robinsons Land has the highest proportionate share of hotel revenues, which implies that the positive impact should be felt more by the company.
“Besides the hotel segment, the gaming sector should also receive a boost from the recovery of tourist arrivals,” Abacus said.
Thus it has a BUY rating for Bloomberry Resorts Corporation as the return of its fly-in patrons “should provide the necessary jolt to further improve the company's profitability.”
Meanwhile, Abacus said the recent drop in the share price of SP New Energy Corporation due to a dispute with a joint venture partner is an opportunity to buy more of the stock.
“Solar energy will be an increasingly important component of the Philippnes' energy mix over the next decade. SPNEC remains the largest domestic company in terms of the number and size of solar service contracts awarded as well as various tracts of land located near existing transmission lines,” it noted.
The brokerage added that SPNEC “is still in the best position to benefit from the country's energy transition. Whatever issues there are at present are only bumps in the road, not a death knell.”
It also noted that the dispute may involve SPNEC’s largest joint venture partner “but it is not the be all and end all of SPNEC.”