Russian invasion, alert level to sway stocks
Russian invasion, alert level to sway stocks
By JAMES A. LOYOLA
Russia’s invasion of Ukraine and its impact on global equities and other markets will continue to weigh on the local bourse although an easing of quarantine measures may give the PSEi a little boost.
“Next week, the local market is expected to take cues from the government’s decision on the COVID-19 alert level status of the country by March 1, 2022, and the ongoing Russia - Ukraine tensions,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He added that, “Easing of restrictions in the country, especially in the National Capital Region, is expected to raise optimism, since it would help our economy in sustaining its recovery momentum.”
However, Tantiangco noted that, “We may not see strong rallies as the Russia - Ukraine tensions may continue to weigh on sentiment.” “Further negative developments of the issue between the two may overshadow positive sentiments stemming from the possible easing of social restrictions in the Philippines, and lead to a decline in the local bourse,” he said.
Tantiangco explained that, “This is due to its impact on the global economy primarily on the supply of oil and other commodities.” On the other hand, a de-escalation of the Russia - Ukraine tensions is seen to give an upward boost to the market.
Aside from these, investors are expected to take cues from the upcoming February IHS Markit Philippines Manufacturing PMI and inflation data, as well as from corporate earnings.
BDO Chief Market Strategist Jonathan Ravelas said last week’s close at 7,212.23 highlights further consolidation within the 7,000 to 7,350 consolidation range in the near-term.
“However, should risk-off trades continue, a break below the 7,000 levels could lead to further losses towards the 6,500 to 6,800 levels,” he warned.
With elections coming up, COL Financial has upgraded GMA Network to BUY after slightly increasing its 2022 revenues estimate by 1.7 percent to P25.2 billion to factor in higher ad revenues including political ads. This increased COL’s 2022 net income forecast by 4.2 percent to P7.9 billion.
“We continue to like GMA7 given its strong financial position and efficient operations. Moreover, the company is in a prime position to capture ad placements for television and radio being the only dominant player in the free-to-air space,” COL said.
Meanwhile, Abacus Securities Corporation favors AllHome after the firm provided a hint of its 2022 outlook with a statement on its hard categories expecting to recover this year.
“With the economy gradually opening since late last year, HOME expects the resurgence of construction activities that should help the hard category to return to pre-pandemic levels,” it noted.
Abacus added that this should boost the prospects of AllHome “as we expect the sustained strength of its soft category and the recovery of hard category to continue earnings growth.” The brokerage also recommends investors to go overweight on Figaro Coffee Group which recently disclosed doubling its 2020 numbers in 2021.
“FCG’s long term prospects remain intact and isbetter positioned to cushion cost pressures from the global commodity surge,” said Abacus adding that, “We still expect FCG to sustain its earnings performance moving forward.”
Abacus also likes AllDay as it expects fourth quarter 2021 profit to be well above the 61 percent growth recorded in the first nine months of last year.
“In fact, the 28.0 percent increase in foot traffic last quarter probably drove earnings higher by more than 100 percent year-on-year. This reinforces and validates our conviction for the stock. We reiterate that the runway for growth is long and ALLDY will benefit from higher consumer spending plus moving forward,” it explained.