Stock market investors will be looking to the Philippines’ inflation numbers for August for cues while also monitoring US and Chinese economies for additional motivation.
China Bank Capital Corporation Managing Director Juan Paolo Colet said, “this week’s market direction will be shaped by investors’ reaction to the latest US jobs report, China’s efforts to prop up its economy, and the Philippine August inflation print.”
He added that, “traders may bet on ‘bad news is good news’ as a softening US labor market, which saw a rise in unemployment to its highest since February 2022, makes the case for the Federal Reserve to hold policy rates steady this month.”
Market participants will also have their eyes on China, where the government is trying to manage a property crisis and a broader economic slowdown.
“Domestic inflation data for August will be top of mind for most investors. The expectation is that this will be higher than July’s 4.7 percent, but a steep jump could introduce fresh volatility to the market,” said Colet.
Philstocks Financial Research Manager Japhet Tantiangco said last week’s gains were tempered, implying that investors are still keeping a cautious stance.
“Bringing back the strong confidence towards the local economy remains as a key challenge. And this week, the situation could get harder,” he noted.
Tantiangco also said, “the local market could move with a downward bias due to the economic headwinds that are seen to further weigh on the already tepid confidence. Investors may digest the S&P Global Philippines Manufacturing PMI which fell to 49.7 implying a contraction in the country’s manufacturing sector.”
“A barrage of data releases should help keep things spicy on the global macro front, especially after the US' Labor Day weekend—consumer confidence survey, home sales data for June (and pending home sales for July), jobs data, and perhaps more crucial than any data point in the super short-term--second quarter US GDP,” said 2Tradeasia.com.
Meanwhile, it noted that the Bangko Sentral ng Pilipinas (BSP) expects August inflation in the 4.8 percent to 5.6 percent range.
“The month-on-month jump is quite significant, so brace for a knee jerk reaction upon confirmation next week's release. Continued inclement weather up to early September could aggravate mood; with the full-month impact of the recent wage hike and high global oil prices plus ramping rice inflation, August data risks more hawkish action in the medium-term,” it added.
For stock picks, COL Financial has added DigiPlus (PLUS) to its BUY list “given the rapid growth potential of its online gaming operations in Bingo Plus.”
“The company also has the financial muscle to capitalize on the attractive growth prospects of the industry given its large growing operating cash flow and strong balance sheet,” it added.
Abacus Securities Corporation also likes PLUS because of its growing slice in the online gaming pie and easy access via e-wallet. PLUS is forecast to grow revenues by at least 38 percent next year.
“More aggressive investors can start to accumulate at current levels but conservative or patient ones can wait for PLUS to correct further. After all, it is still in overbought territory and current holders could switch to other emerging gaming plays,” it said.
COL also recommends a BUY for Shakey’s Pizza because, “in light of its first half results, we are adjusting our estimates to account for the stronger-than-expected revenues, dampened by thinner margins.”
“We like PIZZA for its strong expansion and growth prospects with its brands in Potato Corner and Peri-Peri. Moreover, we expect revenues to maintain growth trajectory and margin pressures to ease later this year,” COL noted.