Stock Market Outlook
Last week
Share prices fell despite the decision of the United States Federal Reserve to hold rates steady, as local investors were more concerned about the April inflation data.
The benchmark Philippine Stock Exchange index declined 13.20 points to close at 6,615.55 points.
The main index was up only on Monday.
Volume of trade during the four-day trading week reached P4.58 billion. Foreign investors were net sellers at P16.77 billion.
Other sub-indices were mixed. The broader All Shares index was up 5.42 to close at 3,498.17, the Financials index rose 38.19 to 2,088.89, the Industrial index fell 23.80 to 8,859.96, the Holding Firms index declined 67.27 to 6,069.30, the Property index plunged 83.54 to 2,428.18, the Services index gained 50.54 to 1,886.79 and the Mining and Oil index was down 74.79 to 8,799.97.
For the week, gainers still led losers 123 to 99 and 35 shares were unchanged.
Top gainers were Steniel Manufacturing Corp., Concrete Aggregates Corp. B shares, PH Resorts Group Holdings Inc., Anchor Land Holdings Inc., DFNN Inc., DigiPlus Interactive Corp. and F and J Prince Holdings Corp. B.
Top losers, meanwhile, were Keppel Philippines Properties Inc., Seafront Resources Corp., iPeople Inc., Manila Mining Corp. A, Asiabest Group International Inc., Top Frontier Investment Holdings Inc., First Abacus Financial Holdings Corp. and JG Summit Holdings Inc.
This week
Share prices may move upwards this week, mainly on bargain hunting.
Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said investors are still moving in a cautious tone, evidenced by the profit taking seen last week as well as the tepid trading activity.
“Also, the market was unable to hold its position above the 6,700-level last week, implying that a resistance remains at the said line,” he said.
“At its current level, the market is trading at a PE [price to earnings] ratio of 13.2 times, below its 2019-2023 average of 18.2 times. This shows that the market is at attractive levels. Given this, we may see episodes of bargain hunting next week. However, ultimately, the market could still be dependent on our upcoming economic data. Investors are expected to watch out first for our April inflation report.”
Global Source Partners said it estimates that the April inflation could skew closer to 4 percent. “The actual core inflation that we will be seeing next week will tell us the extent of monetary policy bite,” it said.
“On one side, they must be expecting too much from a quick impact of tight monetary policy on inflation and a minimal impact of El Niño on food products. On the other side, monetary policy is ineffective, and the prolonged heat wave is more than destructive.”
2TradeAsia said the Bangko Sentral ng Pilipinas (BSP) is likely to follow the Fed’s status quo on rates this May, even if there is a sharp uptick in the April inflation rate.
The BSP is looking at a range of 3.5 percent to 4.3 percent.
“The midpoint of this range is higher than March’s 3.7 percent, and potential drivers are likely fuel and food baskets. We also anticipate imported goods to likely take a hit from the dramatic strength in the dollar recently, further inflaming inflationary pressures in the short-term. We continue to underscore a defensive stance,” it said.
Chartwise, the local market’s support is seen at 6,400 points and resistance is seen at 6,700 points.
Stock picks
Maybank Securities said it is maintaining its positive view on the Philippine gaming sector.
It said it anticipates gross gaming revenue growth to be driven by the domestic mass and slots market, upside from the gradual pick-up in the VIP segment, led by South Korean punters and growth outside Entertainment City, driven by the Solaire Resort North opening and recent surge in e-gaming,” it said.
Combined mass tables and slot machines made up 64 percent of Entertainment City GGR in 2023 from 58 percent in 2019, showing the continued rise in domestic demand.
“We believe this trend in mass and slots GGR will continue driven by increasing private consumption. This should bode well for industry players as hold rates for mass and slots are historically less volatile and provided higher margins,” it said.
“We expect VIP contribution to industry GGR to continue to be dragged by fewer Chinese visitors this year. Nevertheless, we see Korean visitors leading the VIP segment’s gradual recovery.”
It reiterates its buy rating on Bloomberry Resorts Corp., with a target price of P14.50 per share.
Bloomberry shares closed last week at P10.06 apiece.