This week, cautious stock market investors will be looking for cues from the US August inflation report and Philippine data on foreign direct investments and remittances from overseas Filipinos.
While the Philippine Stock Exchange index (PSEi) managed to advance in the last two weeks, Philstocks Financial Research Manager Japhet Tantiangco said “the sustainability of the market’s rise is in question as investors’ confidence is seen to remain tepid amid the recent negative economic developments and the lack of a positive catalyst.”
He noted that, this week, “investors are still expected to be on the lookout for a positive catalyst. Without such, the local market could move with a downward bias.”
Investors are expected to watch out for the US’ upcoming August inflation data as this may give clues on the Federal Reserve’s next policy move.
Investors may also take cues from the upcoming June FDI and July cash remittance data.
“This week could see the index continue its rangebound pattern within the 6,150 to 6,350 area, with investors taking a more cautious stance ahead of the release of US August inflation data,” said China Bank Capital Corporation Managing Director Juan Paolo Colet.
He explained that, “a higher than expected rise in US consumer prices would be unwelcome news for the equities market as it would pile pressure on the Federal Reserve to raise interest rates and prolong a hawkish monetary policy.”
“Traders will also anticipate the FTSE rebalancing, which takes effect on Friday, as that could influence the movement of certain local index heavyweights,” Colet added.
Online brokerage firm 2Tradeasia.com noted that, “bears welcomed the 'ber' months-this is true across almost all asset classes and should highlight the unique (almost precarious) state of global macro that central banks and economic managers are now attempting to balance.”
“These real-world concerns translate to downside risks in the short-term, which explain the depression in market prices. We maintain our view that these are not permanent conditions. Strategize for a long-term hold, especially once the rate cycle tapers off in early 2024,” it added.
For stock picks, Abacus Securities Corporation still sees more upside for Bloomberry Resorts Corporation as it is widely accepted that it will be taking the spot of Metro Pacific Investments Corporation in the PSEi any day now since MPIC has already confirmed that its public float has already fallen below the minimum 10 percent needed to remain in the benchmark’s 30 stock basket.
The brokerage is also recommending investors to accumulate shares of Cebu Air because of its renewed profitability in the past two quarters while its share price has drifted lower.
“It is, in fact, close to the lows at the height of the pandemic in 2020 when nearly no passenger planes were in the air. The market is weak, of course, and jet fuel prices are on the rise, but we believe the market’s indifference to Cebu Pacific presents an opportunity,” it added.