Local stock investors will be looking at key macro-economic figures, such as inflation and labor data, to be released this week in both the US and the Philippines for cues on whether to take the market higher or lower.
Philstocks Financial Research Manager Japhet Tantiangco said the local market will seek direction from upcoming February consumer price index data.
“A February inflation print that is slower than January's 8.7 percent may somehow lift sentiment since this may lead to a less hawkish stance by the Bangko Sentral ng Pilipinas,” he noted.
Tantiangco added though that, “a February inflation print that exceeds the prior month's 8.7 percent may lead to a market decline as it strengthens the case for another aggressive move by the BSP.”
According to online brokerage firm 2TradeAsia.com, “inflation data on March 7 will be crucial for local equities; the BSP expecting another high single digit print (projection range at 8.5 percent to 9.3percent) already has induced anxiety in cyclicals and has made broader market trading choppy in the past few sessions.”
“Investors may also look into our upcoming Labor Force Survey and Foreign Direct Investments data for more clues on the local economy,” Tantiangco said.
2TradeAsia.com also said that, “US jobs data and inflation will take center stage over the next few weeks, and will likely dictate the direction of policy rates just before the FOMC’s next meeting on March 21.”
“While the jury is still out on whether or not the Fed will revert to the 'usual' 2022 hikes of 50bps each (especially if inflation surprises for February), indicative movements from the USD strengthening plus treasury yields are showing markets bracing for another half point hike later in the month,” it noted.
Meanwhile, the brokerage said that, “Despite macro headwinds, company-specific results and outlook are mostly optimistic, based on the overall tone of earnings reports so far.”
“Next week's macro releases are likely to fuel another round of volatility, centered around local inflation and whether balance sheets are braced for another year of interest rate gyrations. Needless to say, the euphoria from the fourth quarter to January rally has worn off, replaced by anxiety over next few quarters; range trade this anxiety, knowing that growth stories are mostly intact in the long-term and will be there when rates come back to earth,” 2TradeAsia.com advised.
For stock picks, Abacus Securities Corporation places Bloomberry among the top of its list specially after it reported better-than-expected earnings last year while expecting a further boost in mass and slots revenues once Solaire North opens next year.
It noted that, “BLOOM’s discount to Macau peers makes it a worthwhile investment.”
COL Financial also likes BLOOM as it is the primary gaming play in the Philippines. BLOOM has a market-leading position in mass gaming, supported by the growth in its premium mass segment and slots.
“Meanwhile, the VIP segment is making remarkable recovery as it does so without much contribution from Mainland Chinese players yet although we should see a recovery in Chinese players this year,” it added.
Abacus is also advising its clients to take advantage of the currently market slump to buy of add shares of D&L Industries as it noted the contributions of the firm’s new Batangas facility which will opened in the middle of this year.
“All of these point to high (or at least higher) margin products that will gradually, but surely, transform the company. The pay off for investors may not be immediate but the long term reward is likely to be worth the wait,” it stressed.
Meanwhile, COL also has a BUY rating on Meralco because power demand is expected to continue to grow this year as the country fully recovers from the impact of the Covid-19 pandemic.
“Moreover, MER’s valuation is becoming increasingly attractive after the 17 percent decline from its peak in March of 2022, underperforming the PSEI’s 11 percent decline from its peak during the same period,” it added.