Last week
Share prices fell for the fourth straight week after the Bangko Sentral ng Pilipinas (BSP) raised its rates by 50 basis points, but analysts said this was expected as inflation accelerated in January.
The benchmark Philippine Stock Exchange index fell 97.77 points to close at 6,779.02 points.
The main index was down almost all week long, except on Wednesday, when it gained 30.85 points, ahead of the policy meeting of the BSP.
Average value for the week was lower at P5.3 billion. Foreign investors, who accounted for 37 percent of the transactions, were net sellers at P1.23 billion.
All other sub-indices ended in the red, led by the broader All Shares index that fell 31.48 points to close at 3,621.69 points, the Financials index declined 12.31 to 1,818.80, the Industrial index shed 58.49 to 9,792.96, the Holding Firms index plunged 159.27 to 6,485.38, the Property index retreated 40.23 to 2,959.04, the Services index was down 20.61 to 1,703.13 and the Mining and Oil index decreased 190.80 to 11,227.31.
For the week, losers edged gainers 149 to 71 and 32 shares were unchanged.
Top gainers were Concrete Aggregates Corp. A and B shares, Lodestar Investment Holdings Corp., Keppel Philippines Holdings Inc. A, Ginebra San Miguel Inc., Liberty Flour Mills Inc., Oriental Peninsula Resources Group Inc., Jackstones Inc. and iPeople Inc.
Top losers, meanwhile, were Figaro Coffee Group Inc., AllHome Corp., Roxas and Co. Inc., Asiabest Group International Inc., Premiere Horizon Alliance Corp., Easycall Communications Philippines Inc., Now Corp. and MerryMart Consumer Corp.
This week
Share prices may still go down this week, but analysts see bargain hunting as total market loss for the fourth straight week of downturn is now at 4 percent.
“With this, we may see some episodes of bargain hunting this week. However, overall, the market is still seen to move with a downward bias amid resurfacing worries over aggressively hawkish monetary policy outlooks of the BSP and the Federal Reserve,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said.
He said investors may continue to price in the BSP’s inflation outlook as its signal of more rate hikes.
“Concerns over a further tightening by the Federal Reserve is also expected to weigh on the market following the higher than expected US January inflation and strong labor market,” Tantiangco said.
Meanwhile, 2TradeAsia noted that the fourth quarter reporting season is currently in full swing. Ayala Land Inc. and Wilcon Depot Inc. will report this week.
“So far, stories have danced around corporate level strategies against higher capital costs and ways to grow EPS [earnings per share] growth outlook of about 19 percent for 2023,” it said.
“Inflation-interest rate related gyrations should keep the market anxiety up over the near-term. On the brighter side, these pain points could be tradeable opportunities, especially for value hunters looking to hold at lower valuations,” it said.
Tantiangco said chartwise, the local market has already gone below its 6,800 support. If it is unable to regain its ground at the said level, this will become its new resistance while its next support is seen at 6,600, he said.
Stock picks
Maybank Investment Banking Group placed a hold recommendation on Aboitiz Power Corp. (AP) as the stock has risen 14 percent since the end of last year and has already outperformed the growth of the main index.
“GNPower Dinginin Ltd.’s coal plant fully came on stream in the fourth quarter of 2022 and will continue to contribute. In addition, 16 percent of AP’s capacity is selling to the spot market, where we see upside amid the tight supply conditions,” it said.
It added that the company’s long-term earnings growth will be driven by 3.7 gigawatts of renewable energy projects between this year and 2030.
“However, we think most of the positives are priced in,” it said.
AboitizPower’s share price closed at P38.50 last week. Maybank placed a target price on the stock at P40 apiece.
Meanwhile, Maybank maintained its buy rating on the stock of Bank of the Philippine Islands as it raised its earnings forecast on the lender by 3.5 percent to account its recently-raised credit card interest rates.
“During the earnings call, BPI confirmed that there will no longer be any dilution arising from its treasury shares. Our higher 2023 earnings forecast, along with our lower share base forecast, raises our target price to P118,” it said.
BPI shares closed at P105.50 apiece on Friday.