The local stock market is expected to draw uneven results and mixed investor sentiments throughout the week, depending on the results of global and local economic data and developments on the Israel-Hamas war.
Philstocks Financial Research Manager Japhet Tantiangco said that “while there are negative developments that are causing selling pressures, we’re also seeing the entry of bargain hunters, giving the market support, hence the sideways movement.”
However, Tantiangco noted that “we may not yet see a strong rally amid lingering worries.”
“Next week, investors may also take cues from our upcoming OFW cash remittance and Balance of Payments data. Investors may also wait for the Q3 corporate earnings report season,” he added.
For his part, China Bank Capital Corp. Managing Director Juan Paolo Colet explained that “after a relatively benign week in the local market, traders will gauge whether upcoming economic data, including Philippine August remittances, China's third quarter GDP, and the Federal Reserve's Beige Book, can provide some bullish impetus.”
“In addition, market participants will keep track of movements in US bond yields given the growing influence of this data point on how the Federal Reserve thinks about policy rates,” he added.
Colet and online brokerage firm 2TradeAsia noted that investors will continue to observe the Israel-Hamas war as further intensification of the conflict “could impact oil prices” and “exacerbate recessionary fears.”
The brokerage firm said the “upcoming third quarter (3Q) earnings results may inject some life back to markets, especially with some of the inflation-tied in Q2 having been relieved partly in Q3.”
The firm advises investors to “brace for dry but volatile trades, at least until after the Fed’s meeting by the month-end, when the smoke clears.”
Abacus Securities Corporation is also advising investors to look towards the travel sector, particularly the airline industry, as the “demands continue to recover and is likely to exceed pre-pandemic levels by next year with domestic and international passengers reaching 115 percent and 90 percent of the pre-pandemic numbers respectively.”
Cebu Pacific (CEB) is expecting to increase its international capacity by 63 percent of pre-pandemic levels, and is eyeing diversification of its fleet.
“However, share price of CEB has still been at a fraction of its pre-Covid numbers but they remain to be viable long-term plays,” said Abacus.
Meanwhile, COL Financial suggests investors buy stocks of the Philippine National Bank (PNB), saying the bank has reported “strong growth in the net interest income (+18.4 percent y/y) and fee income (+36.1 percent y/y) as its lending business continued to recover post pandemic.”
The brokerage revised its net income forecast of PNB to “P14.4 billion (+67.4 percent) for 2023 and Php12.6 billion (+45.8 percent) for 2024."
“We maintain our BUY rating on the stock as we continue to view PNB as a deep value play. As interest rates stay higher for longer, we expect PNB to be a net beneficiary due to its substantial low-cost deposit base. The bank is also pushing forward with its endeavour to reduce low-earning assets and trimming down non-performing loans,” it said.
COL Financial also recommends investors buy the Manila Electric Company (Meralco)’s stocks, stating that “its power demand is expected to continue to expand in line with the country’s GDP growth and as the country fully recovers from the impact of the Covid-19 pandemic.”
Meralco’s renewable energy (RE) development platform MGreen will invest P15.9 billion in SPNEC, acquiring 50 percent of voting interest in SPNEC with the aim of expanding a “solar power generation portfolio with 3,500MW of solar power generation pipeline and 4,000 MW of solar battery energy storage systems in Luzon.”