Stock-Market Outlook

Share prices fell for the second straight week as trading became volatile after the US Federal Reserve conducted its first policy meeting for the year.
Stock Market Outlook

Last week

Share prices fell for the second straight week as trading became volatile after the US Federal Reserve conducted its first policy meeting for the year.

The benchmark Philippine Stock Exchange index fell 24.78 points to close at 7,027.38 points.

The main index was down by more than 250 points at the start of the week, when the US Fed announced its 25 basis point rate hike.

It erased most of the losses on Wednesday, but it fell again on Thursday.

Average daily trading for the week was higher at P10.6 billion, after Tuesday’s trade worth P10.5 billion and Friday’s P18.72 billion.

Foreign investors, who made half of the week’s trades, were net buyers at P534.52 million.

Other sub-indices ended mixed. The broader All Shares index gained 7.83 points to close at 3,705.46 points, the Financials index rose 33.71 to 1,850.40, the Industrial index climbed 123.10 to 10,011.93, the Holding Firms index fell 118.15 to 6,774.20, the Property index declined 58.50 to 3,057.47, the Services index was up 12.41 to 1,771.09 and the Mining and Oil index plunged 572.32 to 11,029.04.

For the week, losers edged gainers 122 to 105 and 26 shares were unchanged.

Top gainers were APC Group Inc., San Miguel Corp., AllHome Corp., Filipino Fund Inc., PTFC Redevelopment Corp., Vivant Corp. and Centro Escolar University.

Top losers, meanwhile, were  Keppel Philippines Properties Inc., Philippine Racing Club Inc., Ferronoux Holdings Inc., Cirtek Holdings Philippines Corp., Imperial Resources Inc., Roxas Holdings Inc. and Italpinas Development Corp.

This week

Share prices are expected to trade within its resistance rage of between 7,000 to 7,100 points on the lack of a strong catalyst and lingering economic concerns.

2TradeAsia said the release of January inflation figures will set the tone for this week’s trades, as it would be crucial to the Bangko Sentral ng Pilipinas moves on its first policy meeting on February 16.

“We maintain our view that equity holders are better off expecting rates to remain elevated than project a pivot over the next 3 to 6 months as macro indicators such as jobs and factory data have shown little to no evidence that rates should be lowered anytime soon,” the broker said.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said the country’s consumer price index data may have a big impact on this week’s trading as inflation remains a key risk to the local economy’s growth outlook.

“An inflation rate near the upper end of the BSP’s 7.5 percent to 8.3 percent projection may pull the local bourse down, while a print biased to the lower end of the forecast may spur optimism,” he said.

Support level of the main index is seen at 6,800 to 6,900 points and resistance at 7,200 points.

Stock picks

Maybank Securities has placed a buy rating on Shakey’s Pizza Ventures Inc. as it forecast a sustained double-digit earnings growth. The company is expanding all brands in its portfolio and is reaping the benefits of the post-Covid reopening rebound.

Sales and net income are expected to surpass pre-pandemic levels by 2022 and 2023, respectively, it said.

“Key downside risks are input price hikes and intensifying inflation-driven competition among other fast food operators, but we are confident that PIZZA’s inventory strategy, market positioning, diverse product portfolio and established delivery system should directly address and mitigate these risks,” it said. It placed a target price on the stock at P10 per share.

Shakey’s shares closed Friday at P8.50 apiece.

Broker Regina Capital Development Corp. has maintained its buy rating on the stock of Double Dragon Corp. (DD), but downgraded its fair value on the stock at P12.80 per share on the lack of short-term catalysts that could prompt significant equity returns.

“While we continue to project more growth from DD’s industrial leasing segment, the contribution to bottomline would not be that significant. On top of that, the very little share price volatility as well as the very clear downward price trend channel prompted us to impose a higher risk premium to our valuation model,” it said

Double Dragon’s shares closed last week at P6.96 apiece.


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