Share prices inched up despite mixed corporate earnings result and on expectations that the Bangko Sentral ng Pilipinas (BSP) may pause rate hikes during its next meeting this month.
The benchmark Philippine Stock Exchange index gained 6.95 points to close at 6,297.30 points.
Broker 2TradeAsia said margin discipline has been the main highlight across second quarter earnings season.
‘Weighted projection for listed firms points to roughly 8 percent to 12 percent full-year earnings growth for the year, an assumption that we see as sector-specific, rather than broad-based,’ it said.
Average volume of trade was still depressed as it averaged only P5 billion. Foreign investors, who cornered 42 percent of the trades, were net sellers at P3.66 billion.
Other sub-indices ended mixed, led by the broader All Shares index that gained 20.77 points to 3,439.17, the Financials index rose 49.04 to 1,942.68, the Industrial index lost 21.65 to 8,108.49, the Holding Firms index added 77.61 to 4,542.24, the Property index was down 9.43 to 1,906.11, the Services index fell 58.05 to 3,417.18 and the Mining and Oil index shed 302.37 to 18,002.93.
For the week, gainers led losers, 125 to 80 and 39 shares were unchanged.
Top gainers were First Gen Corp., Swift Foods Inc., Ionics Inc., Paxys Inc., Cirtek Holdings Philippines Corp., Dominion Holdings Inc., Prime Media Holdings Inc. and ABS-CBN Corp.
Top losers, meanwhile, were Anglo Philippine Holdings Corp., Island Information and Technology Inc., Cityland Development Corp., Converge Information and Communications Technology Solutions Inc., Semirara Mining and Power Corp., Shell Pilipinas Corp. and Macay Holdings Inc.
This week
Share prices may remain depressed this week as investors are advised to maintain a defensive bias and resist the urge to chase high-beta cyclicals on global rate-cut headlines that may not translate into BSP action.
It will be a four-day work week as August 21 is a public holiday for Ninoy Aquino Day.
Broker 2TradeAsia said a softer United States employment data, with its July non-farm payrolls slowing to 114,000 and unemployment rate at 4.3 percent, has reignited aggressive US Federal Reserve’s rate-cut expectations, increasing expectations of ‘no move’ from the BSP at its next Monetary Board meeting on August 27.
‘We feel this assumption overlooks local realities. First, inflation eased to 6.2 percent in July but remains well above the 2- to 4-percent target, and the peso is trading near P61.40 per dollar,’ it said.
‘That leaves little room to exit the BSP’s current hawkish position at the 4.75 percent policy rate without risking renewed currency pressure. Our base case is a hold with very hawkish language attached, which should keep equity multiples capped until the Fed moves with more conviction, by around September.’
The broker said portfolio weightings should stay anchored in well-capitalized banks with strong deposit franchises and high-yield utilities or conglomerates offering dividend visibility that rival bond yields.
‘Use metal-driven rallies in local resource counters for quick gains, and keep dry powder ready for clarity once the August 27 decision lands.’
Stock picks
Broker Regina Capital Development Corp. gave a trade the range on the stock of SM Investments Corp. (SMIC) as its stock price is holding above its rising 9-day and 50-day moving averages at P596.50 and P594.49, respectively, which have converged and turned supportive.
‘However, the price remains below the still-descending 100-day SMA at P603.61, which caps immediate upside. Trade the range for now, buying support near P590 and taking profit into resistance just above the 100-day MA around P605, with a decisive close above that level needed to confirm a fresh trend reversal.’
SMIC’s shares closed last week at P600 apiece.
Meanwhile, it gave a buy on pullback advise on the stock of Jollibee Foods Corp. as its stock price closed above its short- and medium-term moving averages.
It also pushed right up against the still-elevated 100-day MA, which is the last hurdle before a full trend reversal.
‘Momentum favors chasing strength here too, buying pullbacks toward consolidation levels in the P150s and the creation of higher lows may warrant a further upside momentum.’
Jollibee’s shares closed Friday at P155 apiece.