The local stock market is seen to benefit this short trading week from a combination of window-dressing and profit-taking as well as the carry over of positive sentiment from expectations of rate cuts next year.

“The final three trading days of the year will see a mix of window dressing and bargain hunting with the index poised to end 2023 on a positive note,” said China Bank Capital Corporation Managing Director Juan Paolo Colet. 

He noted that, “the local rally in stocks is still driven mainly by growing expectations of interest rate cuts next year even after the Bangko Sentral ng Pilipinas has signaled that policy may need to remain tight for some time.”

“Investors will also have reason to cheer the cooler than expected US November Personal Consumption Expenditures Price Index, the preferred inflation measure of the Federal Reserve, which reinforced bets that US monetary policy will loosen as soon as March 2024,” he added.

Philstocks Financial Research Manager Japhet Tantiangco said that, “at its closing last week, the local market is trading at a price-to-earnings ratio of 13.31 times, below its 2018 - 2022 average of 19.08 times.”

“Long term bond yields have been declining while the Peso has been successful so far in keeping its ground above 56.00 against the US Dollar. These together with the hopes of monetary easing by the Federal Reserve next year may give the market a boost,” he also said.

However, Tantiangco said, “investors could maintain caution in the last week of the year as they assess how our economic outlook would be in 2024. The upside risks to inflation due to supply side issues and the tighter for longer monetary policy of the Bangko Sentral ng Pilipinas, all of which may slow down our economic growth, may weigh on sentiment.”

“In the last week of the year, investors are also expected to still watch out for further catalysts that could give us a clearer picture of how our economy would be in 2024.If there will be no catalysts, the local market could move sideways,” he said.

Meanwhile, online brokerage 2Tradeasia.com said to “expect more buoyant movement in the coming sessions as the December-January season has historically been the most successful trading months for the benchmark index.”

“We continue to harp on value plays in banking, property, and gaming, where the risk-reward is maximized with little downside risk,” it added. 

2Tradeasia.com said “note that a number of issues continue to trade closer to their 52-week lows than their highs, despite more comfortable macro backdrop heading into 2024 plus internal financials confirming cashflow strength. Accumulate these mispriced assets.”

For stock picks, Abacus Securities Corporation is looking at laggards in the PSE that “appear ripe for bottom fishing.”

Among these is Union Bank of the Philippines as its earnings performance should improve markedly in 2024 after the bulk of integration expenses with Citi's retail business have already been spent this year.

“Wilcon, on the other hand, is trading near the bottom of its historical PE range. Valuations may still dip but the company is likely to benefit as the property sector better in 2024 once mortgage rates start to come down,” it added. 

Abacus noted that, “for DNL (D&L Industries), it has a number of things going for it next year. For one, the new plant will ramp up and drive profitability. Second, management said prospects will improve if plans for a higher bio-diesel blend push through.”

“Lastly, we think URC will bounce back next year as inflation gets further under control. The company will also benefit from high sugar prices and increased demand for C2 due to El Nino,” it added.