This week, the local stock market is seen to be swayed by quarter’s end window dressing, the changes in the stock exchange indices, and the confidence survey results recently released by the Bangko Sentral ng PIlipinas (BSP).

“The local market was able to post gains last week amid a rebound that started mid-week. However, sustaining the gains is seen to be challenging,” said Philstocks Research Manager Japhet Tantiangco.

He added that, “from a technical perspective, the market is nearing the 6,150 resistance line. Next week, this line could be tested.”

“Meanwhile, concerns over the still hawkish outlook of the Federal Reserve and the Bangko Sentral ng Pilipinas are expected to continue weighing on sentiment. This comes as both central banks signaled the possibility of further policy tightening before this year ends,” Tantiangco noted. 

He said “investors are also expected to digest the results of the BSP's latest confidence survey which showed that businesses are more bullish but consumers are less upbeat for the next 12 months.”

China Bank Capital Corporation Managing Director Juan Paolo Colet said, “investors should brace for a tough trading week that will test the durability of the technical rally from last Wednesday’s intraday low below 6,000.” 

He added that, “a cloudy economic picture and prolonged hawkish monetary policy will keep risk appetite for Philippine stocks in check. Both the Federal Reserve and Bangko Sentral have left the door open for a rate hike in November and, more importantly, they have signaled a potentially long period of high rates next year.”

“Local market action will revolve mainly around changes to the PSE benchmark index that take effect on Tuesday as well as quarter-end window dressing,” Colet said.

Online brokerage firm 2Tradeasia.com said that “next week being the last trading week of the third quarter may likely provide extra participation from funds that have waited in the sidelines for most of the period.”

It also said that, “the change in the main index's composition should also bump up volumes in the short-term, especially at times like this, where the impact of headlines gets magnified in light of dry, low volume trading sessions. Aim for modest gains for now while stories for 2024 digest macro assumption changes.”

For stock picks, Abacus Securities Corporation said it would advise a hypothetical investor with a million pesos to invest in SM Investments Corporation, International Container Terminal Holdings Inc., GT Capital Holdings Inc., and SSI Group.

“SM will be the anchor of this portfolio, accounting for 40 percent by weight. Heavy foreign selling since the start of August provides an opportunity to buy,” the brokerage said. 

Then, ICTSI would have the second largest weight at 30 percent as it has one of the highest profit compounded annual growth rates over the past 10 years and provides partial diversification from the Philippines. 

Next is GTCAP which would be 20 percent of the portfolio as it provides additional consumer discretionary exposure through Toyota and helps bring down the portfolio's weighted price to earnings ratio to under 10x. 

“Lastly, we spice it up with SSI which accounts for 10 percent of the P1 million as it cements the consumer bent of the portfolio and has the potential to boost the weighted earnings growth higher as disposable incomes drive the firm's earnings over the next five years,” it noted. 

It pointed out that, “as a group, these four companies provide significant exposure not just to consumer but also to banks, property, infrastructure and even a little bit of energy.”