Local stock market investors are closely watching two key developments this week, updates on trade negotiations between the Philippines and the United States (U.S.) and the release of data on remittances from overseas Filipinos (OFs).

“The US’ planned 20-percent tariffs against the Philippines are still expected to weigh on sentiment. Hence, investors are expected to watch out for clues on the Philippines' trade negotiations with the US,” said Japhet Tantiangco, Philstocks Financial Research Manager.

He added, “Signs of progress may help lift the local market. But a lack of positive trade talk developments may pull the market lower. Investors may also watch out for our OFW [overseas Filipino workers] cash remittance data this week for clues on the local economy.” 
The Bangko Sentral ng Pilipinas (BSP) is scheduled to release overseas remittances data for May on Tuesday, July 15.

Online brokerage 2TradeAsia.com noted that while the 20-percent tariff on Philippine goods is a concern, “this rate is comparatively lower than the 36 percent now facing regional peers like Cambodia and Thailand.”

The brokerage highlighted the “strategic exemption of Philippine semiconductors and electronics, which comprise over half of its US exports." It suggested that "while disruptive, the lower tariff burden plus key industry exemptions could paradoxically position it as a more attractive node for supply chain reconfiguration.”

However, 2TradeAsia.com cautioned that the “overarching uncertainty of these reciprocal tariff policies,” with Aug. 1 serving as the next critical deadline, “ensures persistent volatility in global trade flows and obscures long-term earnings visibility, supporting our call for discernment while the path ahead remains obfuscated.”

Despite a pressured macroeconomic backdrop, the brokerage pointed out that local fundamentals remain unique compared to peers due to a confluence of factors: benign inflation, a dovish BSP, and still-robust economic growth.

“This might present a compelling case for sector rotation given difficulty to broadly advocate for the market, at least while key valuation inputs are extremely volatile (risk premia, forward cost of capital, among others),” 2TradeAsia.com stated.

The firm recommended “financials and banks” as core tactical allocations given the “evolution of rates and net interest margin support.” It also suggested that “infrastructure and construction-adjacent issues may enjoy higher sequential order books given public capex [capital expenditure] momentum.” For consumption plays, 2TradeAsia.com advised tilting preference towards those that can "pass-through peso weakness."

For specific stock picks, Abacus Securities Corp. recommended Manila Water Co. following its acquisition of a new water source through Wawa Dam. The firm is also expected to benefit from the valuation uplift due to Maynilad Water Services Inc.'s initial public offering (IPO) and the recent extension of its concession agreement.

Abacus Securities Corp. also favors Universal Robina Corp. (URC) as its sugar business normalizes after previously dragging the firm’s earnings. The cost of its other raw materials, such as coffee and cocoa, has been trending downwards, while improvements in consumer spending are expected to boost sales.