Stock-Market Outlook
Last week
Share prices recovered last week after the Bangko Sentral ng Pilipinas (BSP) announced that it kept its benchmark rates steady and affirmed its view of a 50-basis point reduction before 2025.
The benchmark Philippine Stock Exchange index gained 253.43 points to close at 6,411.91 points.
After weeks of decline, the main index was up all week long, mainly due to bargain hunting.
Volume of trade, however, remained anemic, with value averaging only P4.81 billion.
Foreign investors, which cornered 48 percent of the trades, were net buyers at a mere P7.52 million.
Most sub-indices ended in the green as the broader All Shares index gained 111.46 points to close at 3,486.66 points, the Financials index rose 59.76 to 1,924.59, the Industrial index climbed 211 to 8,986.35, the Holding Firms index was up 41.07 to 5,552.71, the Property index surged 159.86 to 2,517.42, the Services index added 124.31 to 1,996.29 and the Mining and Oil index fell 62.81 to 8,481.55.
For the week, losers managed to edge gainers 122 to 109, while 22 shares were unchanged.
Top gainers were Philippine Racing Club Inc., Vivant Corp., Jackstones Inc., Global-Estate Resorts Inc., Century Properties Group Inc., National Reinsurance Corporation of the Philippines and Macay Holdings Inc.
Top, losers, meanwhile, were Grand Plaza Hotel Corp., MRC Allied Inc., Philippine Bank of Communications, Bright Kindle Resources and Investments Inc., I-Remit Inc., ABS-CBN Corp. and F and J Prince Holdings Corp. A shares.
This week
Share prices may continue climbing due to the dovish signals that the BSP made during its latest policy meeting.
Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said the local market may test the validity of its breach of the 6,400-resistance level.
“If the market is able to hold its ground above the said line, then 6,400 will be seen again as the market’s support while next resistance is seen at 6,700,” he said.
“BSP Governor Eli Remolona has signaled the possibility of a rate cut in their August meeting. Prospects of monetary easing are expected to boost confidence towards the market given its positive impact on the general economy as well as on the corporate sector. Next week, investors are also expected to watch out for the Philippines’s June inflation data as this would also provide clues on our country’s monetary policy outlook.”
Broker 2TradeAsia said the BSP is much more optimistic on its baseline inflation forecast, coming down to just 3.3 percent, from 3.5 percent in 2024, and 3.1 percent from 3.3 percent in 2025.
“In an ideal world, now-comfortable CPI [consumer price index] projections especially extending towards the next 12 to 24 months would have prompted downward adjustments to rates; external factors are understandably affecting the visibility of risks-these factors include choreography with the US Fed and geopolitical tensions in the region, among others,” the broker said.
“The first semester of the year officially comes to a close, and while downward revisions in earnings have been more common this part quarter, corporate stories under our monitoring remain interestingly intact, albeit riddled with medium-term margin pressure and much weaker capital deployment.”
Stock picks
Last month, President Marcos Jr. signed into law the Real Property Valuation and Assessment Reform Act (RPVARA), which seeks to standardize the country’s valuation of real property, including an increase in the valuation of properties closer to market prices. This will result in higher real property taxes on all real property assets.
Maybank Securities said its impact analysis of the two property developers implied that SM Prime Holdings Inc. (SMPH) is likely to be more affected in terms of 2027 earnings at -2.3 percent while Ayala Land Inc., will be less affected at -0.2 percent.
“Based on our analysis, we expect that the impact of RPVARA will mostly be felt by real property owners whose assets are classified as commercial, where assessment levels are typically higher. Hence, we see a bigger impact on SMPH’s commercial properties.
Additionally, those who own large land banks in areas where discrepancies in zonal values and market values should also feel a greater effect,” it said.
The broker said its top pick for the country’s property sector remains Ayala Land “as we think its residential division’s efforts to target the premium market will continue to result in healthy pre-sales going forward.”
The broker also gave a buy rating on SM Prime as it continues to see strong earnings growth to be led by its continued mall expansion.
“We nonetheless remain cautious in the near-term given higher-for-longer policy rates dampening prospects.”
SM Prime shares closed last week at P28.30 apiece, while Ayala Land shares closed at P28.50.