Stock market investors will be taking their cue from the April inflation data to be released this week as this could affect interest rates while also looking forward to the release of the country’s gross domestic product (GDP) numbers.
“Investors are still moving in a cautious tone, evidenced by the profit taking seen last week as well as the tepid trading activity. Also, the market was unable to hold its position above the 6,700 level last week, implying that a resistance remains at the said line,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that “at its current level, the market is trading at a price-to-earnings ratio of 13.2 times, below its 2019 - 2023 average of 18.2 times. This shows that the market is at attractive levels. Given this, we may see episodes of bargain hunting next week.”
“However, ultimately, the market’s could still be dependent on our upcoming economic data. Investors are expected to watch out first for our April inflation report,” Tantiangco noted.
An inflation print exceeding the upper end of the government’s two percent to four percent target may lead to negative sentiment in the market.
“Investors are also expected to watch out for our upcoming first quarter GDP report with the fourth quarter 2023 GDP growth of 5.6 percent as their benchmark. A first quarter GDP growth above 5.6 percent may spur optimism, while one that falls below, may weigh on the bourse,” he added.
For its part, 2TradeAsia.com said, “the BSP is likely to follow the Fed's status quo on rates this May, sharp April inflation notwithstanding. April CPI is expected to be printed next week, with the BSP looking at a range of 3.5 percent to 4.3 percent.”
“The midpoint of this range is higher than March's 3.7 percent, and potential drivers are likely fuel and food baskets (rice, meat, power, and transport). We also anticipate imported goods to likely take a hit from the dramatic strength in the dollar recently, further inflaming inflationary pressures in the short-term,” it added.
The brokerage noted that “we continue to underscore a defensive stance that is focused on cash flow strength (dividend-focused and whose P&Ls are not sensitive to volatile line items such as forex translation, crude oil inputs, among others).”
Meanwhile, 2Tradeasia.com said, “a deluge of analyst briefings and corporate guidance in the coming week may help rouse animal spirits— maximize potential yield by locking in at currently depressed prices. The best gains sometimes come out of the most uninspired periods of the market.”
For stock picks, COL Financial has a BUY rating on BDO Unibank after it reported record first quarter earnings.
“We are refining our estimates for BDO following the bank’s first quarter earnings on expectations of slightly quicker loan growth, stable net income margin, and higher opex,” the brokerage said.
COL said it also has a BUY rating for Robinsons Retail Holdings Inc. following its first quarter results.
“We raised our net income forecast for 2024 to P9.5 billion to account for the one-time gain resulting from the BPI-RBC merger. Meanwhile, we maintained our 2025 net income forecast of P6.7 billion,” it said.
Col also has a BUY rating on AboitizPower “as we believe that it long term earnings growth outlook has improved following the ramp up of its renewable energy capacity expansion initiative.”
Abacus Securities Corporation also noted that “with the recent series of yellow and red alerts, second quarter WESM prices are likely to improve significantly and so should AP’s earnings. And, with several solar projects coming on stream from this quarter onward, our view is that the company will handily beat consensus.”