Stocks

Stocks to trade with downward bias this week – Manila Bulletin

The market is seen to take cues from more first quarter earnings reports although investors remain jittery and may trade with a downward bias.

“For next week, the market may still move with a downward bias as it contends with a lot of headwinds both onshore and offshore,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

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He noted that, “Onshore, concerns over rising inflation and consequently, the possibility of an earlier rate hike by the Bangko Sentral may continue to weigh on sentiment.”

“The Fed’s policy statement in the upcoming week will pull focus, given still-jittery labor markets and persistent inflation pressures,” said online brokerage 2TradeAsia.com.

It added that, “Strong consensus for a 50 bps rate hike is likely price-in, but there is now mounting pressure on the BSP to catch-up in some way, likely by making parallel rate hikes.”

While the BSP initially communicated that policy changes may not be material until the second half of the year, 2TradeAsia.com said a June hike is now within sight.

“May inflation to be printed late this week plus first quarterGDPP will be prognostic of possible revaluation come mid-year,” it said.

“Adding to these is the resurfacing worries over a possible resurgence of COVID-19 cases here in the Philippines,” Tantiangco said.

Overseas, he cited the “the weakening of China’s economy amid their COVID-19 situation, the possibility of a further escalation of the Russia – Ukraine war, and their implications on the local economy may also dampen sentiment.

Next week, Tantiangco said investors may also take cues from our upcoming Q1 2022 earnings reports.

According to 2TradeAsia.com seven large caps (representing 23 percent of the PSEi basket) will report first quarter results.

It advised investors to “tread lightly and monitor intraday volume amid an on-edge market sentiment. The thing with broad-based selloffs is that there is little to no bias towards company-specific fundamentals—even the best trees get burned in forest fires. Hunt for bargains, those that will mostly shrug off inflationary and rate risks.”

“Chartwise, support is now seen at 6,600 while resistance is seen at the 7,000 to 7,100 range. The market’s 50-day exponential moving average is about to cross below its 200-day counterpart. If this continues it will form a Death Cross which signals a possible downtrend for the market in the medium to long term,” Tantiangco warned.

For stock picks, Abacus Securities Corporation is recommending a BUY for GT Capital after upgrading its target price to P700 per share as sales of its subsidiary Toyota Motor Philippines have recovered faster compared to the rest of the industry.

It also noted that, the upgrade is due to the slightly higher stock prices for Metrobank and Metro Pacific as well as a higher 2022 forecast for TMP.

Abacus is also bullish with BDO Unibank because, “Despite the lackluster results, we continue to be overweight on BDO. Net interest margin has stabilized and is poised to expand while loan growth should accelerate.”

Meanwhile, COL Financial has a BUY rating on Alliance Global Group following its strong earnings.

“We believe AGI shares are very undervalued. AGI’s stake in EMP is already worth more than AGI’s market cap… In addition, AGI, through Travellers, Megaworld, and Golden Arches, is well positioned to benefit from the reopening of the economy,” it added.

COL is also upgrading its recommendation on EEI Corporation from HOLD to BUY following the recent selloff in the stock.

“This month alone, EEI’s share price declined 16.2 percent from P5.67 to P4.75. This has made the stock attractively priced now that the upside to our fair value estimate is at 29.9 percent,” the brokerage said.

It added that, “We reiterate our favorable view on EEI’s long term prospects given its a) dominant position in the construction industry, b) advantage in winning new projects from the government’s Build, Build, Build program, and c) the company’s healthy construction backlog.”

 

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