This week, the local market will be taking cues from firms that will be releasing their first quarter earnings reports while sentiment will continue to suffer from concerns over rising US interest rates which makes equities less attractive.

“Next week, the local market is expected to continue contending with macroeconomic concerns while positive catalysts are yet to be found,” Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “The rally in the US bond yields amid the aggressively hawkish signals from the Federal Reserve may cause the foreign fund outflows from the Philippine market to continue.”

“Sentiment has been slightly tilted to the downside over the past few weeks (arguably, months) ahead of a speculated landmark 50-bps rate hike by the Fed in early May,” said online brokerage 2TradeAsia.com.

It noted that, “Anecdotally, what this entails is a mad scramble to shift to much higher yielding assets; in this case, bonds or fixed income instruments that are now poised to post positive real yields. The result is a less attractive equities market.”

“The silver lining is that local rate hikes are not to tango 1:1 with the Fed's, which means the ripple effect should be cushioned in favor of equity holders,” 2TradeAsia.com added.

Meanwhile, Tantiangco said “Concerns over the knock-on effects from China’s economy amid its COVID-19 situation on the Philippine economy may also weigh on market sentiment.”

He said inflation worries may also dampen sentiment with a hefty fuel price hike anticipated this week coupled with the mounting agricultural damages from Tropical Depression Agaton.

“Amid convoluted uncertainties on the macro front that may linger over the next few weeks, attention may shift to sector or company-specific stories, in line with the onset of first quarter 2022 earnings releases,” said 2TradeAsia.com.

It added that, five large caps will report this week (Meralco, Emperador, Wilcon, Aboitiz Equity Ventures and Aboitiz Power), comprising a quarter of the weighted PSEi basket.

“The shareholders meetings and first quarter earnings season offer excellent opportunities to look for prospects at a more granular level. Hunt for bargains on dips, ahead of high-traffic, high-stakes 2022 elections,” 2TradeAsia.com advised.

Among the stocks currently favored by Abacus Securities Corporation is PLDT after it disclosed the actual terms for the sale of over 5,900 cell towers for P77 billion.

Abacus said the sale will generate a one-time, after tax gain of P28 billion. Part of the proceeds (P27.5 billion) will be used to pay down debt and savings on financing charges will be significant at P2.6 billion which is about 7 percent of consensus pre-tax profit this year.

In addition, management said P9.0 billion of special dividends will be paid out equivalent to P41.66 per share.

“As such, the deal will be immediately earnings accretive at up to P3.0 billion per year which is about 10 percent of 2022 consensus earnings. All of the above reinforce our Buy rating for TEL,” Abacus said.

Abacus also likes MacroAsia specially after sister company Philippine Airlines reported a better-than-expected performance in the first quarter.

“Macroasia should also indirectly gain if PAL does return to sustainable profitability. And, just to reiterate, our view is that MAC will be quickest transport or travel play to return to pre-pandemic profitability,” it added.

Meanwhile, COL Financial is looking at some firms that may be worth buying if the market falls due to rising bond rates, higher 10-year US treasury yields, domestic inflation expectations, and a weaker Peso.

“We’ve split our top picks into two categories: Stocks that have outperformed the index this year, which we expect to continue after the market recovers, and stocks that have been greatly lagging the index but remain strong fundamentally.”

It noted that, “Out of all the stocks that have outperformed the market, we like Aboitiz Power, BDO Unibank, and Metrobank for when the market finds its bottom and subsequently rallies.”

“Among the laggard issues, we like Puregold, Ayala Corporation, Megaworld, and D&L Industries the most. These stocks remain fundamentally attractive despite lagging behind the PSEi. DNL is already down 23 percent year-to-date even if it is able to pass on higher commodity costs, similar to Puregold," COL said.