The local stock market is seen to remain cheap and this may continue to spur investors to bargain-hunt although the recent rise in the inflation rate and worries over the country’s economic growth are seen to limit any rallies.

“The local market remains at bargain levels with a price to earnings ratio of 13.57 times, below the 2018 to 2022 average of 19.08 times,” said Philstocks Financial Research Manager Japhet Tantiangco. 

He noted though that, “a sustainable rally may not be seen yet moving forward. Next week, concerns over the strength of our economic growth are expected to weigh on the market as the rise in our inflation is seen to challenge aggregate household consumption.”

“In addition, our fast inflation is seen to fuel anxiety over the possibility of a further policy tightening by the Bangko Sentral ng Pilipinas, which in turn poses downside risks to our economic growth outlook,” Tantiangco added. 

Online brokerage firm 2Tradeasia.com said that, “as this print marks the second consecutive monthly increase, another 25bps rate hike is more than likely going to be implemented (next BSP meeting is on November) to stifle any trend that may be forming going into 2024.”

“The silver lining is that US inflation has decelerated the most in September,” it noted. Coupled with the strong US jobs data reported, there might be some source of positive momentum this week. 

2Tradeasia.com advises that, “in the meantime, keep a flexible hand in trades while global markets forces find their equilibrium. Range trade.”

Amid concern over the US and Philippine economies, Abacus Securities Corporation is advising investors to keep their money in the stock market by picking defensive stocks like utilities (such as Manila Water), energy (AboitizPower), and consumer staples (such as SMIC and Puregold).

“But for those who are really conservative, switching to REITs (real estate investment trusts) offer not just yield but an opportunity to profit if the Fed starts cutting rates in response to a recession,” it noted.

Meanwhile, COL Financial continues to recommend that investors buy Bloomberry and Nickel Asia shares despite a recent downward adjustment in their fair value (FV) estimates.

For Bloomberry, COL said, “we are adjusting our FV estimate from P15.30 to P14.80 as a result of the increase in the number of outstanding shares of BLOOM (following a private offering of shares).”

“We continue to like BLOOM as a bottom-up pick 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,” it added. 

For Nickel Asia, COL reduced its 2024 net income forecast for 2024 by 3.3 percent and for 2025 by 3.4 percent due to the impact of proposed royalties and windfall taxes to be imposed on mining firms.

However, the brokerage said, “we continue to like NIKL as we remain positive on the long term outlook for nickel due to the rising EV battery demand. Furthermore, we believe that NIKL’s expansion of its RE power generation business comes at an opportune time given the strong cash flow generation of its nickel mining business, as well as the tightening of power supply in the country.”