The outcome of the local market next week is expected to heavily hinge on the announcement of the October inflation rate, with investors bracing for the impact of the key local economic data on Tuesday, Nov. 7.
China Bank Capital Corp. Managing Director Juan Paolo Colet said that “investors will have their eyes on important Philippine economic data this week to assess whether our local market can rally above the 6,000 resistance.”
“After a good trading week in the US spurred by views that the Federal Reserve is potentially done with its rate hike campaign, we may see a bullish spillover to domestic stocks if the October inflation print on Tuesday shows an easing of consumer price pressures and the third quarter GDP release on Thursday paints a better growth picture for the economy. The index could trade within the 5,900 to 6,150 range,” he remarked.
Meanwhile, Philstocks Financial Research Manager Japhet Tantiangco noted that, “last week, the local market bounced back, climbing by 0.46 percent,” but “it was not able to regain its position above the 6,000 level, implying that a resistance may already be forming at the said line.”
“Recently, the US’ long term treasury yields have been declining while the Peso has appreciated against the US Dollar. If the said trends are sustained, this could help the local bourse in advancing further next week,” he said.
Tantiangco highlighted that the S&P Global Philippines Manufacturing PMI print of 52.4 for October may further lift the positive sentiment, along with the local inflation and GDP data which are expected to play a “crucial role in the market’s performance.”
“Inflation data significantly slower than September’s 6.1 percent and a strong rebound in our GDP growth figure for the third quarter is seen to spur optimism in the bourse. If we don’t see such however, tepid expectations for the local economy could remain which in turn may keep the market downwardly biased,” he explained.
Online brokerage firm 2TradeAsia said that breaking past the 6,000 level is the Philippine Stock Exchange Index's (PSEi) “new ambition in the short term,” with major earnings releases and macro indicators “helping the index get some momentum heading into a historically more buoyant November-December-January run.”
It advised investors and traders to “use the last few weeks of the year to reposition in favor of value.”
As for highlighted stocks for the week, Abacus Securities Corporation has recommended the purchase of Aboitiz Power Corp.’s stocks, citing the firm’s 37 percent growth in net income to P26.7 billion for the first nine months of this year.
The stock brokerage firm noted that the power company’s net income results are “way ahead of expectations and already account for 86 percent of full-year estimates.”
Abacus also recommended a buy rating for Aboitiz Equity Ventures (AEV), focusing on the eight percent increase year-to-date of its recurring net profit to P17.3 B with the infrastructure segment being its biggest contributor.
“The major improvements in its smaller segments, coupled with a steady Aboitiz Power Corp. and better 2024 numbers from Union Bank of the Philippines (UBP), make AEV a stock worthy of consideration for next year,” it said.