Despite stock prices falling to bargain levels, the market remains bearish amid concerns about the weaker peso, potential US interest rate cuts, and US policies under the new political leadership.
“The local market’s technical indicators continue to show a bearish bias, with the bourse falling for four consecutive weeks, the last showing the steepest decline. The market has also dropped below multiple crucial support lines and zones, most recently the 6,700 - 6,800 range,” said Philstocks Financial Research Manager Japhet Tantiangco.
He added, “The market’s four-week decline has made it even more attractive, raising the possibility of bargain hunting in next week’s trading. However, if current headwinds persist, the risk of another decline remains high.”
These headwinds include the local currency’s weakness and the rise in long-term local and US bond yields. Concerns also linger about potential protectionist US policies and their impact on the global economy.
“On a positive note, our strong third-quarter and first-nine-month corporate earnings may provide market support,” said Tantiangco.
Online brokerage 2TradeAsia.com stated, “Markets have been tense since late October, exacerbated by the US elections and recent comments from the Federal Reserve. While the Fed proceeded with its 25 basis-point cut for November, inflation nearing its target range and a strong jobs market were cited as reasons to avoid aggressive rate cuts.”
It noted, “Markets interpreted this as a signal that rate cuts will not be as rapid as previously anticipated. Treasury and foreign exchange markets are pricing in three to four rate cuts in 2025 with variable timing (compared to over four front-loaded cuts in the first half of 2025).”
“Combined with anticipated shifts in geopolitical and trade policies next year when Trump officially takes office, sentiment is now bracing for a resurgence of inflation and a potential pause in monetary easing,” 2TradeAsia.com explained.
Amid these uncertainties and the potential impact of typhoons and the peso’s weakness, the brokerage advises investors to be more selective, focusing on value stocks and sectors with less exposure to foreign exchange fluctuations and import dependence to maximize returns.
“Look for oversold shares for rebound plays in the short to medium term as the market assesses the evolving risks for 2025 and searches for equilibrium,” it added.
COL Financial has a BUY rating on Vista Land (VLL), citing its current price as well below the stock’s fair value estimate and its significant discount to net asset value (NAV).
“VLL’s fundamentals are solid, with real estate revenue and take-up sales growing year-on-year. A potential decline in interest rates would further boost sales. Meanwhile, leasing revenues are stable for VLL and account for approximately 45 percent of revenues, providing a steady income and cash flow to support its property development business,” it explained.
COL also has a BUY rating on Philippine National Bank (PNB), considering it a deep value play trading at only 0.20 times its book value.
“With interest rates expected to remain higher for longer, we anticipate PNB to benefit due to its substantial low-cost deposit base. The bank is also focused on improving profitability by reducing low-earning assets and trimming non-performing loans,” it added.
Abacus Securities favors Ayala Corporation, believing it is undervalued based on both NAV and price-to-earnings metrics. “Recent market weakness presents a buying opportunity as we expect growing pains from newer subsidiaries to subside over the next year or two,” it noted.
Abacus also likes SM Prime, which posted strong nine-month results. “Typhoons may have had a less severe impact on foot traffic than anticipated, and easing inflation in the third quarter compared to earlier this year may have also contributed to the positive performance.”