While Ghost Month ends on Sept. 2, the local stock market is seen to continue to consolidate just below the 7,000 resistance level as investor sentiment remains upbeat although eyes will be on the August inflation numbers later this week.
“The market could move with an upward bias on the back of expectations that the Philippines’ August inflation print which will be released on Thursday would be lower than July’s 4.4 percent,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that “Confirmation of the said expectations may also somehow give the market a boost on the latter part of the week.”
Online brokerage 2TradeAsia.com said “a Bangko Sentral ng Pilipinas rate cut plus a potential decline in August consumer price index are likely to manifest another 25bps rate cut in late October, in time for fund repositioning ahead of third earnings report in November and outlook for 2025.”
Tantiangco added, “Investors are also expected to take cues from other economic data, including the Peso’s movement against the US Dollar, the S&P Global Philippines’ Manufacturing PMI for August, and the Philippines’ labor force figures for July.”
Meanwhile, 2TradeAsia.com said “The Fed all but confirmed a rate cut on September 18th most recent Fed minutes show moderating job adds and progress towards the two percent inflation target to be reasonable drivers of adjustment in policy.”
It added that, “the path to more rate cuts is wide open even after September; markets are solidly expecting at least one other cut in November or December, and about 100bps to 125bps cut for 2025.”
“Officially two-thirds into the year and at the tail-end of the Ghost Month, the PSEi remained just beneath 7,000. Evolving geopolitical downside risks should provide additional short-term friction on top of supply pressure.
“However, in the long-run, lower interest rates mean cash returns are coming back to earth, and ultimately the excess cash should find their way back home to equities,” 2TradeAsia.com said.
For stock picks, Abacus Securities Corporation favors Puregold, noting that, “With inflation easing and rate cuts appear to be spurring consumer confidence and spending recovery in the near-to-medium term, PGOLD could actually be a legitimate bargain play with recent earnings results surprising to the upside.”
“Gross margins have improved as well in the second quarter of 2024 and is likely to improve further with forex becoming more favorable for the S&R side.
“Continued store network expansion should also boost its medium-to-long term targets with S&R opening more stores in Luzon while Puregold maintaining its 30-plus stores per year,” said Abacus.
It added that, “Easily, PGOLD is the stock to own among the listed retailers and could interestingly enough see a rally if it maintains its strong performance with the pending rate cuts and easing inflation.”