Stocks to watch inflation, other economic data
By JAMES A. LOYOLA
The local stock market may see some more profit-taking at the start of this week but investors will mainly be swayed by the release of several economic indicators of which the June inflation number is the most important.
“The local market’s movement may depend on the upcoming economic data. Investors may take cues from the upcoming June S&P Global Philippines Manufacturing PMI and the May labor force survey for clues on the strength of the local economy. Strong figures may boost sentiment which in turn could bring the market higher,” said Philstocks Financial Research Manager Japhet Tantiangco.
He added that, “Investors are also expected to watch out for the Philippines’ June inflation rate. A further slow down from May’s 6.1 percent may also spur optimism next week.
“In terms of fundamentals, investors will be digesting a number of economic data releases this week, with the Philippine June inflation print being the most keenly awaited for signs of a sustained relief in consumer prices,” said China Bank Capital Managing Director Juan Paolo Colet.
He explained that, “A large decline in local inflation, especially one that overshoots median expectations, could spur bullish trades. Any positive market momentum, however, will be hard pressed against the hawkish policy trajectory of the US Federal Reserve.”
“It was quite clear that June's (Fed) rate pause was the exception, not the rule, and a possible 25bps to 50bps in July is still up in the air,” said online brokerage 2Tradeasia.com.
It added that, “This plus June local inflation next week, should be the main source of macro anxiety for participants, while waiting for the BSP's next move on rates in its August meeting.”
“Absent any surprises, the first trading week of the new semester will likely remain range-bound, with bargain hunters waiting below 6,400 and sellers emerging towards 6,600,” said Colet.
2Tradeasia.com said “We continue to reiterate that, at current levels, valuations relative to forward earnings-and even to alternative assets-are very attractive… Accumulate.”
For stock picks, Abacus Securities Corporation is recommending Figaro Coffee Group because the stock is cheap as it is only trading at about 7 times forward price-to-earnings ratio whereas its peers are trading at an average of 17 times P/E.
“Given the positive outlook on the stock and its performance remains to be the fastest growing restaurant among its peers, we remain a Buy on FCG,” it noted.
Meanwhile, COL Financial has a BUY rating on Globe Telecom as “We continue to like Globe for its leadership in the mobile segment and potential value drivers such as the GCash IPO.”
“Additionally, having captured 96 percent of mobile-generating subscribers as of late June, we see limited revenue-loss risk from the SIM registration act,” it added.