The local stock market may continue to ride higher on news of the lower Philippine inflation and indications of disinflation in the US although investors will still be waiting for the US July inflation report and some local economic data for more cues.
“We’re seeing a build-up of upward momentum as the market was able to maintain its ground above 6,400 and at the same time break above its 50-day exponential moving average. However, value turnover is still not convincing as many investors are still staying on the sidelines,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that “Next week, the market could be able to extend its upward movement. This is primarily due to our latest inflation print which showed a slowdown.
“The latest inflation data is seen to be supportive of prospects of a rate cut soon by the Bangko Sentral ng Pilipinas which in turn is positive for the market.”
For its part, 2Tradeasia.com said that while the Philippine inflation rate eased in June, there remain downside risks in the second half of the year, such as the onset of a heavier rainy season and forex volatility.
“While this makes an August rate cut less imaginary and more real, there has to be more persuasive data points this July to tip the edge over rate cut territory,” it noted.
Tantiangco added, “Investors are also expected to watch out for the US’ June inflation print, which would provide clues on the Federal Reserve’s policy direction.
“Investors are also expected to watch out for clues on our local economy through our upcoming labor market, foreign trade, and foreign direct investments data.”
2Tradeasia.com said “Fluctuations in price (this) week may be partly tied to US inflation for June-highly anticipated by global watchers as it could direct the US Fed's move on its next policy meeting at the end of this month.
“More recent hawkish comments from the Fed point to a July no-cut, but admission of disinflation and latest Fed minutes showing concern over the impact of elevated rates are suggesting a potential crack in September,” it noted.
The brokerage advised investors to “Anticipate some consolidation as chart-wise the index has had historical staying power around the 6,500 zone. Relatively critical weeks ahead as global central banks contemplate on intervention-watch this space and range trade.”
For stock picks, COL Financial has a BUY ratinbg for Jollibee as its latest acquisitions in Compose Coffee and Botrista will help the company scale its global footprint and accelerate its expansion in the coffee and tea space.
“We also expect continued growth from international operations, which turned EBIT positive last year, underpinned by JFC’s leadership in the PH. At its current price, we believe the stock presents an attractive upside potential relative to our fair value estimate at 30 percent,” it noted.
Abacus Securities Corporation said “We reiterate our preference to buy on dips for JFC as the deal should be in line with its goals to be a global leader in the Coffee and Tea space.”
However, the brokerage said it has some questions regarding Compose Coffee’s income statement including the presence of substantial construction revenues, "Transfer of Other Provisions" in non-operating expenses which was the main driver of the 55 percent drop in net income for 2023, as well as the company’s taxes rates in Korea.