Market to remain cautious – Manila Bulletin

The local stock market is seen to remain weak, weighed down by recent bad news, although investors are seen looking for further clues in the release of more economic data as well as the Bangko Sentral ng Pilipinas meeting on rates this week. .

“Economic concerns may continue to weigh on investor sentiment following recent disappointing narratives, including the 2020 forecast for the Philippines’ GDP contraction of 9.5 percent from S&P Global Ratings and pessimistic results from the latest confidence survey BSP business and consumer business, “said Philstocks senior financial analyst Japhet Tantiangco. .

These may extend the local market decline into next week, he noted, while trading could also remain anemic as many remain on edge amid uncertainty loops in the market.

This week, Tantiangco said: “Investors are also expected to look to the upcoming bank loan and money supply data, IHS Markit Manufacturing PMI and the BSP policy rate decision for clues on the condition of the local economy.” .

Meanwhile, Abacus Securities Corporation has warned that market liquidity may begin to decline with the recent approval of the initial public offering of broadband provider Converge ICT worth up to P41.5 billion.

“Con-verge ICT’s upcoming IPO may start to affect trading in the next two weeks. The size is relatively large compared to recent offerings and can induce a sale as investors accumulate cash, ”the brokerage noted.

Online stockbroker 2TradeA-sia.com noted that investors may also be looking forward to the recovery of third-quarter earnings. “The niche sectors that have used capacity significantly in the third quarter relative to the second quarter, such as provincial real estate, infrastructure and logistics, may be worth considering in the medium term,” he added.

“Clearly, fundamentals are still in play and as such it would be wise to look beyond volatility to the next fundamental angle: the 2021 rally. They gradually build up on dips,” he advised.

While there aren’t many stocks to recommend these days, Abacus noted that investors can start buying Ayala Corporation stock whenever its price drops, as it will be “tied to any economic recovery” given the breadth of its business interests.

Abacus said the deterioration in Ayala’s share price “has gone far enough and may have been overstated by recent regulatory and political nuances.”

“It’s unfortunate, but it offers investors a better entry point … we think it now offers much better value compared to a few years ago and especially to some of its peers.”

For COL Financial, Semirara Mining and Power Corporation shares are worth buying despite the company’s poor earnings prospects this year due to falling coal and power rates and more unplanned power outages. higher than expected.

“We believe that a lot of the negative news already has a price. The stock is the cheapest of all the electric companies … according to our earnings forecast, ”he added.

COL explained that while coal prices remain low, Semirara’s profits will improve due to higher production volume, while its power generation business will also improve due to better plant availability and higher level of capacity. contracted from its power plants.