THE cut in interest rates by the central bank failed to cushion the fall in last week’s share prices, seen continued to be weighed down by alleged state officials’ corruption and a weak peso.
The benchmark Philippine Stock Exchange index fell 71.07 points to close at 6,037.79 points.
‘The local market remains bearishly biased as seen on its direction and value turnover. Trading remains tepid, implying weak investor confidence,’ Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said.
The main index was marked by a sharp fall on Monday, followed by gains on Tuesday and Wednesday. However, the index dropped during the rest of the week despite monetary authorities’ decision to cut rates, which surprised many investors and analysts.
‘As of last week’s closing, the local market remains undervalued with a P/E (price to earnings) ratio of 10.1 times. This is below its five-year historical average of 17.3 times and the regional average of 18.6 times. As of the moment, the PSEi still has the lowest PE ratio among peers,’ Tantiangco said.
All other sub-indices ended mixed. The broader All Shares index declined 27.41 points to close at 3,658.44 points, the Financials index fell 61.44 to 2,021.75, the Industrial index gained 20.13 to 9,036.52, the Holding Firms index retreated 117.84 to 4,850.95, the Property index was down 22.18 to 2,272.41, the Services index rose 14.05 to 2,284.31 and the Mining and Oil index soared 1,053.14 to close at 14,312.36.
For the week, gainers edged losers 121 to 112 and 28 shares were unchanged.
The top gainers were PXP Energy Corp., Anglo Philippine Holdings Corp., Atlas Consolidated Mining and Development Corp., Coal Asia Holdings Inc., Liberty Flour Mills Inc., Citystate Savings Bank Inc. and Philex Mining Corp.
The top losers, meanwhile, were Roxas and Co. Inc., F and J Prince Holdings Corp. A, Transpacific Broadband Group Int’l. Inc., Pacifica Holdings Inc., Global Ferronickel Holdings Inc., Lodestar Investment Holdings Corp. and VistaREIT Inc.
This week
SHARE prices are expected to move downward; but some investors may opt to hunt for bargains.
‘Bearish sentiment is expected to linger fueled by concerns over the Philippines’ corruption issues and its impact on our economic growth outlook. Investors are also expected to monitor the movement of the local currency against the US dollar,’ Tantiangco said.
A further depreciation for the peso is expected to drag the local bourse.
In addition, revived global economic worries as the US imposes new tariffs against China are expected to aggravate market pessimism, he said.
Broker 2TradeAsia said there is a shift in regional risk premium.
‘And while the domestic story should still hold overall, near-term alpha at home might remain limited to thematic such as gold mining, income/cash flow like real estate investment trusts and tertiary plays,’ it said.
‘Plays in the near-term are likely bound to selectives to capture defensive yields amid flow rotations, especially while clarity on the Fed’s next move is still translucent,’ it said.
A major resistance for the main index is seen at 6,150 points followed by the 50-day exponential moving average. Currently, the market is testing its 10-day exponential moving average. Major support is seen at 6,000 points, Tantiangco said.
Stock picks
BROKER Regina Capital Development Corp. gave a buy when support holds on the stock of lender BDO Unibank Inc. (PSE: BDO).
‘BDO dropped by 2.57 percent, extending its recent downtrend as it failed to hold above the 50-day MA at 139.56. Price remains below the 100-day and 200-day MAs, reflecting continued bearish market sentiment,’ it said.
‘Unless support around 135.00 holds, further downside movement could develop in the short term,’ the broker said.
BDO shares closed last week at P134.80 apiece.
Meanwhile, the broker advised to buy at pullbacks on the stock of Areit Inc. after its share price surged by 7.49 percent, marking a strong breakout from its recent consolidation phase.
‘The price now trades well above the 50-day, 100-day, and 200-day MAs at 43.59, 42.09 and 40.71, respectively, reinforcing a bullish bias with momentum regaining strength,’ the broker said.
With price breaking key resistance, continuation toward the P46 zone is likely if support at P43.50 holds, it said.
Areit shares closed last Friday at P42.75 apiece.