While the recent rout in the stock market has brought stock prices down to attractive levels, uncertainties over trade and monetary policies are dampening investor sentiment.

According to 2TradeAsia.com, the Bangko Sentral ng Pilipinas’ signalling that it may push back the next rate cut well into mid-year, price reaction to this “deferral has likely been baked in last week, and a lower baseline may mean potential outperformance when rates get adjusted in late second quarter or in the third quarter.

It noted that, “Earnings continue to exceed expectations in an otherwise dismal quarter plagued with escalating downside risks in the macro. That being said, some sequential deceleration of topline drivers from the third quarter to the fourth quarter of 2024 has been noted, which may bleed into the first quarter this year.

“Combined with foreign exchange and input costs that have been volatile as of late, impact to profit and loss may be more felt, and returns across sectors are likely to be more dispersed.”

In this environment, 2TradeAsia.com said some stock selection may be more relaxed in the face of much lower entry windows and value plays are still advocated for.

However, it warned that, “Tensions abroad and uncertainties in trade and monetary policies cast a very long shadow over markets-these may persist in the medium-term, and strategies have to take into account weak capital flows and lower appetite for risk.”

For stock picks, Unicapital Securities has a BUY rating for Ayala Land Inc. and its real estate investment trust AREIT Inc., noting that ALI is still trading at a 66 percent discount to its one-year forward net asset value, the widest discount in its historical performance.

For AREI, the brokerage said “We project dividend per share to grow by eight percent to P2.51 per share in 2025 and by five percent to P2.62 per share in 2026...AREIT trades at a one-year forward yield of 6.6 percent with a total return potential of 31 percent. this yield is also higher than benchmark reference rates.”

Unicapital also favors SM Prime Holdings Inc. despite the softness in the residential condominium market, noting that this is already factored in and added that, “At current levels, the stock is trading at 55 percent discount to its one-year forward net asset value, wider than its 10-year average of approximately 20 percent.”