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Last week
Share prices fell during the three-day trading week as macroeconomic headwinds persisted and the United States reported higher inflation rate.
The benchmark Philippine Stock Exchange index (PSEi) fell 86.07 points to close at 6,659.39 points.
This was the main index’s seventh straight day of decline, as the PSEi was down all-week long.
Broker 2TradeAsia said US inflation came in higher than expected, putting renewed pressure on to the US Federal Reserve to sustain elevated rates longer than previously anticipated.
“Futures markets are now pricing in a fading probability of a June rate cut, down to 21 percent from 73 percent last month, pushing a more probable September 2024 cut. This aligns with our view from December that rates may come later than originally communicated, and rates are not coming down until high inflation fully relaxes into the 2 percent range.”
Other sub-indices ended mixed. The broader All Shares index fell 37.78 points to close at 3,517.40 points, the Financials index was up 14.82 to 2,040.73, the Industrial index declined 94.05 to 8,709.54, the Holding Firms index shed 123.31 to 6,201.15, the Property index plunged 99.76 to 2,566.09, the Services index rose 10.25 to 1,857.23 and the Mining and Oil index surged 233.98 to 8,284.15.
For the week, losers outnumbered gainers 139 to 78 and 24 shares were unchanged.
Top gainers were Synergy Grid and Development Phils. Inc., F and J Prince Holdings Corp. A shares, Discovery World Corp., Manila Broadcasting Co., PXP Energy Corp., DoubleDragon Corp. and Macay Holdings Inc.
Top losers, meanwhile, were Medco Holdings Inc., DigiPlus Interactive Corp., Pacifica Holdings Inc., Imperial Resources Inc., Semirara Mining and Power Corp., Crown Equities Inc., Atok-Big Wedge Co. Inc.
This week
Share prices may post gains this week, but mainly on bargain hunting.
Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said the local market is currently at a price-to-earnings ratio of 13.3 times, lower compared to its 2019-2023 average of 18.2 times.
“At its current position, bargain opportunities are seen. Hence, next week, we may see episodes of bargain hunting. However, worries over the Philippines’s inflation and interest outlook are expected to persist which in turn may continue to weigh on the market. This comes amid the mounting inflationary risks which raise the possibility of a delayed rate cut by the Bangko Sentral ng Pilipinas.”
2TradeAsia said an upward adjustment on the Bangko Sentral ng Pilipinas inflation forecast for the year to 4 percent from 3.9 percent is the “icing on top of this quarter’s hawkish cake.”
“This forecast pushes the CPI [consumer price index] at the top end of the 2-percent to 4-percent target, driven by worsening upside risks.”
It said the probability of an extended downtrend past 6,500 should warrant extra caution in trades.
“On that front, any stabilization above 6,600 could open windows for short-term range trading, at least while the broader market rationalizes capital cost outlook for the remainder of 2024 Disappointed markets tend to overreact on prices-grounded expectations and objective trading is key,” the broker said.
Immediate support is seen at 6,500 to 6,600 points and resistance at 6,800 points.
Stock pick
Maybank Securities maintained its buy ratings on Filinvest REIT Corp. (Filreit), as its income last year beat consensus estimates, despite being below the broker’s estimates.
“The underperformance resulted from lower revenues on declining occupancy rates coupled with increased expenses. We trim our 2024 and 2025 earnings to 9 percent and 8 percent, respectively, to reflect weak 2023 earnings.”
It also cut its target price on the stock by 8 percent to P4.04 per share.
“There is 46 percent upside to our target with 2024/2025 implied yields of 9.9 percent/10.5 percent, thus maintain our buy recommendation.”
Filreit shares closed at P2.96 apiece on Friday.
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