While the local stock market is ripe for bargain-hunting after crossing the bear market line led to a steep drop last week, analysts warned that sentiment continues to be on the negative side due to macroeconomic factors here and in the US.
“With four straight weeks of decline, we expect bargain hunting to ensue. However, we may not see a complete turnaround yet as sentiment could remain bearish,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that “Investors could still be concerned with how the Philippine economy would be this 2025 following its below target performance last year, and how the Bangko Sentral ng Pilipinas can help given that the Fed is slowing down with its policy easing. Adding to the worries is the uncertainties in the US’ foreign policies.”
For this week, Tantiangco said, “Investors are expected to watch out for upcoming economic data for clues. These include the S&P Global Philippines Manufacturing PMI, January 2025 inflation rate, and December 2024 labor market data.”
Online brokerage 2TradeAsia.com noted that, while the Philippine gross domestic product missed the economic team’s target band, “The miss is not extremely out of left field; consensus average late last year averaged to about 5.8 percent to 6 percent.”
2TradeAsia.com added that “a break below 6,000 is critical. This may primarily be a knee-jerk reaction to negative headlines; a breach in this key trendline is major and warrants caution in short-term trades.
“Monitor potential attempts at recovery next week, as oversold conditions may attract bargain hunters. Maintain composure, capitalize on despair.”
Prior to last Friday’s market plunge, COL Financial upgraded Wilcon Depot and Nickel Asia Corporation to BUY even though they will be removed from the benchmark PSE index on Monday this week.
The brokerage said it upgraded Wilcon to BUY from HOLD since the negatives from lackluster earnings results and anticipated removal from the PSEi have already been priced in.
It cited that “the sharp decline in share price already presents significant upside relative to our fair value estimate of P17.10 per share… Looking ahead, we anticipate that the more accommodative interest rate environment should support the recovery of private construction projects and benefit Wilcon.
COL also upgraded Nickel Asia as valuation became increasingly attractive after the share price declined by 36 percent in the past 12 months, underperforming the PSEI’s six percent decline during the same period.
“Despite NIKL’s disappointing earnings performance in the first nine months of 2024, we believe the planned sale of its stake in the Coral Bay HPAL and rebound in nickel ore price have greatly improved the earnings outlook for this year.
“We also remain positive on the long-term outlook for nickel due to the rising EV battery demand. In addition, we believe that NIKL’s expansion of its RE power generation business comes at an opportune time given the continued tightness in the country’s power supply.”
Noting that high dividend-yielding stocks are faring better than the rest of the market, Abacus Securities Corporation is recommending PLDT, Manila Water Company, and Citicore Energy REIT Corporation, which are among its top picks for 2025.
“Apart from its yield, we do also think there is also some potential in capital appreciation in these names with various catalysts in Voyager/Maya, rate rebasing, and land infusions, respectively,” it added.