Stock market outlook | VG Cabuag

Last week

Stock prices fell last week, with the main index returning to the 6,300-point level, after the International Monetary Fund lowered its economic projections and the Bangko Sentral ng Pilipinas (BSP) said it would follow the decision of the American Federal Reserve.

The benchmark Philippine Stock Exchange index fell 135.06 points to close at 6,383.70 points.

The Philippines celebrated Independence Day on June 12, a four-day trading week. The main index has been falling all week.

Turnover by value was low, averaging only P3.42 billion. Foreign investors were net sellers of 1.28 billion pesos.

All other sub-indexes closed in the red. The broader all-stock index fell 44.18 points to close at 3,447.75, the financial index fell 34.72 to 1,971.70, the industrial index lost 144.09 to 8,972, the holding company index fell 106.61 to 5,554.53, the real estate index fell 18.35 to 2,456.40, the services index fell 63.64 to 1,948.97 and the mining and oil index plunged 500.59 to 8,685.79.

For the week, losers outnumbered gainers, 144 to 58, and 40 stocks were unchanged.

Top gainers were Steniel Manufacturing Corp., Philweb Corp., Anchor Land Holdings Inc., Italpinas Development Corp., Berjaya Philippines Inc., Seafront Resources Corp. and Philippine Business Bank.

The biggest losers, meanwhile, were the B shares of Concrete Aggregates Corp., Metro Alliance Holdings and Equities Corp. A, MRC Allied Inc., Asiabest Group International Inc., Roxas and Co. Inc., Jolliville Holdings Corp. and Easycall Communications Philippines Inc.

This week

Stock prices could rise next week, but mainly on the hunt for bargains.

It will be another four-day trading week as June 17 has been declared a public holiday to mark Eidl Adha.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said that with the decline in markets last week, the stock market fell below the 6,400 level, considered its support level.

The market's 50-day exponential moving average has also moved below its 200-day counterpart, forming a death cross, which indicates the possibility of a downtrend in the future. Overall, the market chart showed bearish developments.

Last week's four-day drop appears to have opened the door to bargain-hunting opportunities, he said.

However, the optimism necessary for the market recovery is not yet visible. Investors are still waiting for positive catalysts, mainly a sign of monetary policy easing in the Philippines soon, Tantiangco said.

Therefore, this week, unless we see positive developments regarding our interest rate outlook, the local market may only move sideways, with bargain hunting providing the upward force. Downside risks, including the Federal Reserve's less dovish outlook and continued peso weakness, could continue to weigh on market sentiment.

2TradeAsia said sectoral plays and remaining selective about company stories should be optimal in the medium term, awaiting greater momentum that would bring volumes back up to soar for the second half of the year.

Timing the market is expensive, not so much because it is inherently negative, but rather because of the extreme difficulty of executing a property. The same is true when it comes to timing trades in relation to a potential pivot in interest rates, which becomes more nuanced. because the volatility of inflation factors and the geopolitics of it all are taken into account.

Immediate support for the main index is seen between 6,200 and 6,250 and resistance at 6,500.

Stock Selection

Brokerage Maybank Securities maintained its buy rating on Ayala Corp. even though the decline in its shares since the start of the year reached 14 percent.

We still think its current price presents a buying opportunity. Its current net asset value [net asset value] constitutes the value of its participation in Ayala Land and BPI, while implying the values ​​of GLO [Globe Telecom Inc.]ACEN (Corp.) and its portfolio companies are free, the broker said.

We believe the stock remains undervalued as AC trades below its five-year average discount of 25 percent, at 33 percent.

He set a target price for the stock at P1,000 per share.

Ayalas shares closed last week at P573.50 each.

Meanwhile, the broker maintained its Buy rating on RL Commercial REIT Inc. (RCR) after the company announced an ownership-for-stock swap with its sponsor, Robinsons Land Corp.

The deal includes 11 shopping centers and two offices, which will increase RCR's gross leasable area by 72 percent to 827,808 square meters. The deal is expected to be finalized by the fourth quarter.

We increase our 2024/20225 earnings forecast by 38 percent/67 percent and increase our price target by 4 percent as contributing to the injections requires an additional 4.99 million shares.

RCR was last traded at P5.31 per share.