Investors in the local stock market will be looking out for the government’s release of the inflation and employment numbers which may determine whether the Philippine Stock Exchange Index (PSEi) can stay above the 6,700 level.

“An inflation print (for January) lower than December 2023’s 3.9 percent especially one which is near or at the Bangko Sentral’s 2.8 percent to 3.6 percent target may spur optimism which, in turn, may drive the market higher,” said Philtocks Financial Research Manager Japhet Tantiangco. 

He added that “aside from this, investors may also watch out for our upcoming labor force survey for clues on the health of the local economy.”

Tantiangco also noted that the "local market extended its rise last week and was able to close above the 6,700 level which is considered to be a strong resistance. However, value turnover remained tepid on average, implying that the market’s rise still has weak conviction.”

This week, he said “the market may test the validity of its breach of the 6,700 level. If the market succeeds in sustaining ground at 6,700, this will be its new support while a minor resistance is seen at 6,800. If the market fails however, the market may retest its 10-day exponential moving average.”

Online brokerage 2Tradeasia.com said that “with the start of the Lunar New Year (February 10) comes fourth quarter earnings… Corporate results will go a long way in helping the index inch closer to 7,000, amid a more exciting macro backdrop now.” 

It added that “while most large and mid-caps sport very attractive valuations at the moment, we reiterate our calls on banking, property, power, gaming and holdings, as they come with compelling growth-oriented stories to max out value.” 

For specific stock picks, Abacus Securities Corporation has a Buy rating for Union Bank of the Philippines because its loan growth this year may be stronger than initially expected and will be an additional boost to 2024 earnings.

Higher yields due to its recent acquisition of Citibank’s Philippine credit card business has already resulted in a sharp increase in the bank’s overall net interest margin.

COL Financial also has a BUY rating on UBP as it expects the bank to “continue to grow its lending business as it continues to unlock value from cross-sell opportunities to newly-acquired Citi clients.”

“As the bank completes the transition of former Citi products and data onto its own platforms, operating expenses should also decrease by an estimate P2.5 billion to P3 billion, providing a boost to net income,” it added.