Stock-Market Outlook

view original post

Last week

Share prices fell for the second straight week on weaker-than-expected economic growth of the Philippines and the higher April inflation print, which weighed on investor sentiment, according to analysts.

The benchmark Philippine Stock Exchange index lost 103.62 points to close at 6,511.93 points. 

The main index was down in three of the five trading sessions as investors sold their positions following the announcement of economic figures. 

The country’s first quarter GDP grew 5.7 percent, slightly higher than the previous quarter’s 5.6 percent but slower than the previous year’s 6.5 percent. 

“An initial look-through at the breakdown shows steep deceleration in private consumption,” broker 2TradeAsia said. 

Trading volume was weak throughout the five-day sessions, only averaging at P4.83 billion, with foreign investors, which only cornered 43 percent of the trades, were net sellers at P3.04 billion. 

Other sub-indices ended mixed with the broader All Shares index losing 21.04 points to close at 3,447.13 points. The Financials index plunged 82.37 to 2,006.52, the Industrial index rose 217.52 to 9,077.48, the Holding Firms index declined 230.25 to 5,839.05, the Property index shed 12.66 to 2,415.52, the Services index gained 50.51 to 1,937.30 and the Mining and Oil index surged 295.60 to 9,095.57. 

For the week, gainers managed to outnumber losers 123 to 102 and 32 shares were unchanged. 

Top gainers were GEOGRACE Resources Philippines Inc., Asiabest Group International Inc., Grand Plaza Hotel Corp., Coal Asia Holdings Inc., Anglo Philippine Holdings Corp., Atok-Big Wedge Co. Inc. and ABS-CBN Corp. 

Top losers, meanwhile, were Philippine Racing Club Inc., Kepwealth Property Phils. Inc., Macay Holdings Inc., Benguet Corp. B, NiHAO Mineral Resources International Inc., Millennium Global Holdings Inc. and Discovery World Corp. 

This week

Share prices may rise, still on bargain hunting, as the market is now below its 200-day exponential moving average, again giving a bearish signal.

Investors are also expected to continue digesting the first- quarter corporate results during the week.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said there might be some episodes of bargain hunting given that the market is trading at attractive levels. 

“Investors are still expected to maintain caution however while waiting for the Bangko Sentral ng Pilipinas policy meeting to happen later within the week. Investors are expected to wait for cues from the BSP regarding their policy outlook in light of the latest macroeconomic data wherein inflation and GDP growth both came in below expectations,” Tantiangco said.

2TradeAsia said the BSP is expected to keep its rates this week, but stubborn inflation figures is making many to speculate of a hike in key policy rates.

“The probabailty of a rate cut by June as initially communicated by the BSP is gradually evaporating in light of high US inflation and the US Fed moving rate cuts further into the year. Our then-conservative outlook that rates may not move und sale into the year is being supported by new data points, which puts pressure in growth and alpha plays in equities.” 

Chartwise, the local market may retest its 200-day exponential moving average. If it is able to regain position above the said line, then the market may target next its 50-day exponential moving average. If it fails to do so however, the market may decline to its support at 6,400, Tantiangco said. 

Stock picks

Philstocks has recommended trading the stock of Monde Nissin Corp. on its good figures for the first quarter. 

“Since the stock has been creating higher lows, we recommend trading the uptrend of the stock. Our suggested entry price is P11.56 for traders,” it said. 

It gave a target price of P13.22 apiece for Monde Nissin shares.

Shares of Monde closed last week at P11.30 apiece. 

Meanwhile, the broker advised to buy in dips on the stock of Century Pacific Food Inc. after its revenues rose for the first quarter driven by the recovery of the exports business, 

“Chartwise, the stock has consistently been on an uptrend since last year. It continues to create higher lows and is showing bullish signals,” the broker said. 

It set a target price of P41.40 for the stock.

Century Pacific shares closed Friday at P35.50 apiece.