Amid strong corporate results and hopes for an April rate cut, investors in the local stock market are seen to continue accumulating cheaper stocks this week while waiting for stronger catalysts.
“The BSP (Bangko Sentral ng Pilipinas) is reportedly mulling an April rate cut but reiterates how policy remains largely data dependent,” said online brokerage 2TradeAsia.com.
It added that, “This reaffirms our note from last week, which anticipated an earlier-than-expected pivot assuming deep positive spread of actual inflation print versus consensus median.
“Note that markets often extrapolate from positive forward guidance from the BSP, which should explain relative stability of prices this week despite political noise.”
2TradeAsia.com said back of the envelope estimations of inflation distribution over the first half of 2025 suggest maintenance of the current trend (below three percent) given base effects and improvement in rice and imported energy costs.
“While macro narrative continues to oscillate widely between inflation-interest rate anxieties and geopolitics (exacerbated by local political tensions), the unfolding of first earnings season shows a sharp contrast: data show outperformance in our monitored sectors, with earnings growth in the double-digits,” the brokerage said.
It noted that, “Current dissonance between macro noise and fundamentals at the corporate level (contextualized by current prices) should encourage bottom-up picking, at least while waiting for stronger catalysts to develop.”
“March inflation data that could eventually pave way for an April rate cut (both early April events) might provide the escape velocity the PSEi requires to approach 6,500,” 2TradeAsia.com concluded.
For his part, Philstocks Financial Research Manager Japhet Tantiangco said, "the market remains undervalued leaving rooms of opportunities for long term investors. However, downside risks remain, mainly the global economic risks brought by the US protectionist trade policies."
"On a positive note, the Peso has been strengthening recently. A continuation of this is expected to help in sustaining the market’s rise.
"Investors are also expected to watch out for the remaining 2024 corporate reports. Strong results are also expected to help in driving the market higher," he added.
For stock picks, Abacus Securities Corporation has a BUY rating for ACEN Corporation after its 2024 earnings came out better than expected adding that, “The wait may be long but the payoff will be worth it.”
Meanwhile, COL Financial has a BUY rating for DMCI Holdings even though its 2024 core profit was below forecast, noting that the stock is trading below its historical price-to-earnings ratio and has provided a very high dividend yield of 10.4 percent.
COL has also upgraded ICTSI to a BUY rating “as we believe the company will be able to sustain its growth amid the on-going issues in global trade.”
ICT expects US trade war to have a marginal effect on volume. Management said that the trade war has a marginal effect on its three drivers for volume, namely local consumption, raw materials, and export demand.