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Stock-Market Outlook | VG Cabuag

Last week

Share prices managed to post gains last week, with the main index reaching 6,900 points, after Wall Street’s advance on the back of easing inflation in the United States.

The benchmark Philippine Stock Exchange index (PSEi) gained 283.57 points to close at 6,951.54 points.

The main index started the week strong with a 127.27-point increase on Monday but fell for two successive sessions. It gained close to 3.6 percent on Thursday and Friday due to improved sentiment.

Average daily trading volume increased and was valued at P6.38 billion, while foreign investors, who just cornered 31 percent of the trades, were net sellers at P45.39 million.

All other sub-indices managed to close in the green, led by the broader All Shares index that gained 124.55 points to close at 3,637.62 points, the Financials index rose 105.18 to 1,791.34, the Industrial index surged 412.66 to 9,973.56, the Holding Firms index added 225.52 to 6,707.49, the Property index climbed 84.84 to 3,052.78, the Services index soared 62.77 to 1,727.05 and the Mining and Oil index increased 249.87 to 11,537.81.

For the week, gainers edged losers 177 to 57, and 19 shares were unchanged.

Top gainers were Lorenzo Shipping Corp., Victorias Milling Co. Inc., Medco Holdings Inc., Axelum Resources Corp., Manila Jockey Club Inc., Cemex Holdings Philippines Inc. and Atlas Consolidated Mining and Development Corp.

Top losers, meanwhile, were Keppel Philippines Holdings Inc. B shares, Philippine Racing Club Inc., Jolliville Holdings Corp., Easycall Communications Philippines Inc., Apollo Global Capital Inc., PXP Energy Corp. and I-Remit Inc.

This week

Share prices may fall this week as many investors may pocket their gains during the previous week’s upward trajectory of the benchmark index.

Broker 2TradeAsia said the market’s climb is mostly broad-based and is in line with its baseline expectations for 2023, as there were fewer downside risks heading into the first quarter of 2023 with “no black swan events” in supply chains and oil markets.

“Improving macro backdrop cascading into earnings is another matter altogether, and figuring which sectors will receive the greatest windfall will help optimize returns. Our back of the envelope review supports opportunities in rate-sensitive assets in banks and real estate,” it said.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said the market may sustain its ground at the 6,800-point support level supported by optimism towards the local economy’s outlook coupled with tempered expectations on the Federal Reserve and the Bangko Sentral ng Pilipinas’ monetary tightening following the slowdown in US inflation.

“Investors may also take cues from our upcoming OFW cash remittances and balance of payment position data,” he said.

The market has a new support level at 6,800 points, while resistance is seen at the 7,000 to 7,100-point range.

Stock picks

Cristina Ulang, research head at First Metro Investments Corp., advised to go heavy on holding companies as these will capture the gains of the economy.

These companies include SM Investments Corp. (SMIC), Ayala Corp., GT Capital Holdings Inc. (GTCAP), Aboitiz Equity Ventures Inc. (AEV), DMCI Holdings Inc. and JG Summit Holdings Inc,. 

“Of course there are challenges and we’re hoping for a greater resiliency. The telcos will give you the yield the dividend yields, the stable recurring yields and a play on the digitization of the Philippine economy,” Ulang said.

“This is the play on the Philippine macro economy, which is very resilient, with 6 percent growth and that will be manifest in our earnings forecast of 15 percent for the PSEi.”

Shares of SMIC closed at P908, Ayala at P739, GTCAP at P464, AEV at P59.70, DMCI at P12.22 and JG Summit at P56.50 last Friday.

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