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Stock-Market Outlook

Stock-Market Outlook

Last week

Share prices gained for the seventh straight week as investors bought stocks on Friday, but the main index remained at the 6,900-point level.

The benchmark Philippine Stock Exchange index gained 22.62 points to close at 6,942.21 points.

The main index was down from Tuesday to Thursday, when the government revealed that the country’s inflation rate in February reached 3.4 percent, breaking its four-month downward trend.

“This is still within the BSP’s [Bangko Sentral ng Pilipinas] 2.8 percent to 3.6 percent forecast range, but upside drivers have considerably gone up since mid-first quarter and is only expected to become more volatile heading into peak summer season,” broker 2TradeAsia said.

The volume of trade was still low, averaging P4.7 billion during the five-day trading. Foreign investors, which cornered 47 percent of the trades, continued to be net buyers at P1.72 billion.

The volume of trade was still low, averaging P4.7 billion during the five-day trading. Foreign investors, which cornered 47 percent of the trades, continued to be net buyers at P1.72 billion.

Most sub-indices ended in the red, led by the broader All Shares index that fell 6.40 points to close at 3,602.81 points, the Financials index declined 11.43 to 2,020.18, the Industrial index plunged 220.44 to 9,136.08, the Holding Firms index rose 89.81 to 6,603.99, the Property index shed 33.30 to 2,844.14, the Services index gained 64.72 to 1,809.66 and the Mining and Oil index decreased 57.47 to 8,410.52.

For the week, losers edged gainers 118 to 84 and 46 shares were unchanged.

Top gainers were Keppel Philippines Holdings Inc. A and B shares, National Reinsurance Corp. of the Philippines, AgriNurture Inc., Medco Holdings Inc., Lepanto Consolidated Mining Co. A and B, Manila Bulletin Publishing Corp. and Manila Mining Corp. A.

Top losers, meanwhile, were Philippine Racing Club Inc., Philippine Trust Co., ATN Holdings, Inc. A and B, Premiere Horizon Alliance Corp., Integrated Micro-Electronics Inc., East Coast Vulcan Corp. and Del Monte Pacific Ltd.

This week

Share prices may continue to test the psychological 7,000-point level this week, but it may go down to break its seven-week run.

“The 7,000 zone has so far been elusive, with recent sessions characterized by long wicks signaling strong selling pressure up top, although Friday’s technical confirmation has brought near-term technical relief,” 2TradeAsia said.

“This is a reminder that while rallies are not eternal. Prices have to consolidate at some point, ultimately, long-term uptrends are produced, directed, and shaped by positive fundamentals and spreads between intrinsic value and price.”

This week’s key events that will influence overall market direction are the release of United States January consumer price index data and the outcome of the BSP monetary policy meeting, according to Juan Paolo Colet, managing director at China Bank Capital Corp.

“The BSP is very likely to keep its policy rate unchanged while maintaining a hawkish tone in view of upside risks to domestic inflation. Given that many market participants do not expect the BSP to cut rates ahead of the US Federal Reserve, investors will pay close attention to how this week’s US inflation print will feed into the timing of a dovish shift in US monetary policy.”

The next US Federal Reserve meeting is slated on March 19 and 20. 2TradeAsia advised to brace for interim price swings in rate sensitive sectors, although expectations so far are leaning towards a non-move on the central bank.

Support for the main index is seen at 6,800 points, and while resistance is seen at 7,000 points.

Stock picks

Maybank Securities gave a buy rating on Bank of the Philippine Islands (BPI) as it is optimistic on the lender’s digital initiatives and branch and manpower rationalization, which could lead to higher fees and lower costs.

“We forecast BPI’s 2024 net income to increase by 7.4 percent, year-on-year, driven by our assumption of mid-teens loan growth as BPI consolidates Robinsons Bank’s loan portfolio, which is largely high-yielding consumer loans.”

It set a target price on the stock at P132 per share.

BPI shares closed Friday at P118.10 apiece.

Meanwhile, the broker also gave the same buy rating on the stock of BDO Unibank Inc. as it raised its income forecast on the lender by 4 percent this year and 6 percent by 2025 on account of higher-than-expected loan yields.

“BDO’s 2023 net income is up by 28 percent year-on-year to P73.4 billion. Net income includes P6.1 billion from the recognition of unrealized gains from the acquisition of Keppel Group’s 50 percent stake in SM Keppel Land Inc. Excluding this, net income would have been in line with our forecast,” it said.

It raised its target price by 8 percent to P185 per share.

BDO’s shares closed last week at P157 apiece.

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