With the Christmas season in full swing, the local stock market is seen to gather optimism from hopes of rates cuts by both the Federal Reserve and the Bangko Sentral ng Pilipinas this month.
“The local market was able to bounce back last week and close at the 6,700 - 6,800 support range. This week, the market may continue to test the said range,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that, “The market could move with an upward bias amid hopes that the BSP will further ease monetary policy. This comes as inflation is seen to remain under control based on the latest figures.”
“In addition, the local currency's appreciation against the US Dollar, if it continues, may give the market a boost. Investors are also expected to watch out for the US' upcoming November inflation numbers as this would give clues on the Federal Reserve's policy outlook,” Tantiangco said.
Online brokerage 2TradeAsia.com said “A December Fed rate cut on the 18th is all but priced in by market globally-the surveyed probability for the US benchmark rate to be in the 4.25 percentto 4.5 percent range (implied 25bps cut) is over 70 percent as of this writing.”
“Any outcome that is not this cut is likely to stymie rallies for the rest of the month, especially for risk assets whose growth stories for next year have been disrupted by more uncertain path towards neutral rates,” it added.
2TradeAsia.com said “It is interesting to note, in this season of looking ahead and repositioning into next year, that local equities, fundamentally, are in a position of strength relative to counterparts in developed markets, common headwinds notwithstanding.
“For instance, where valuations have inflated globally, local equities have made little moves outside of their historical trading bands. Margins have also been relatively stable.”
For stock picks, Abacus Securities Corporation is looking at Semirara Mining and Power Corporation favorably due to the recent decline in its share price although it will be better if it goes down further.
This is because of the high probability the firm’s dividend payout will be maintained and the stock is thus a low-risk dividend play at this point.