1 week Ago By N/A (James A. Loyola)
Global markets will be looking for cues from the release of US inflation figures this week while local equities are seen to be more volatile as it experiences a tug-o-war between improving investor sentiment at the domestic front and concerns over the weakening of the US economy. “This week, the local market may still move with an upward bias. A downside risk to this however is if more evidence is seen pertaining to the weakening of the US economy,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that, “From a fundamental standpoint, the market remains undervalued. Hence, we still see room for bargain hunting. However, the worries over the health of the US’ economy is seen as a headwind for the bourse.
” On a positive note, Tantiangco said “the latest inflation figures are seen to strengthen the case for the continuation of the Bangko Sentral ng Pilipinas’ monetary policy easing. This, in turn, is seen to drive optimism in the market.” “Also, the local currency has recently exhibited appreciation against the US Dollar.
If this continues next week, it is also expected to give the market a boost,” he said adding that, “investors may also watch out for the upcoming foreign trade and foreign direct investments data for clues on the local economy.” For its part, 2TradeAsia.com said “Volatile trades are to be expected in the near-term, amid the release of US August payrolls last weekend and August inflation this week-any surprises might just tip the US Fed towards a 'supersized' (higher than quarter-point) rate cut on its meeting on the 17th to 18th.
” “With macro fundamentals turning for the better (or at least, indicators are so far positive on paper), attention should quickly revert to corporate valuations-and how (they) have still yet to truly recover, post-pandemic. “Positive momentum in the short-medium term allows quick trading gains, but long-term alpha is firming up and seems to no longer be limited to deep value or income or dividend plays. Accumulate,” the brokerage advised.
For stock picks, COL Financial has a BUY rating on Manila Electric Company because “We like MER given its predictable and stable cash flow from its power distribution business.” “We also like MER as its profitability is least vulnerable to the risks facing the power industry (volatility in WESM and commodity prices and unplanned outages) because bulk of its profits come from the distribution business,” it added..
