Stock market to see bargain hunting – Manila Bulletin

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Stock market to see bargain hunting

By JAMES A. LOYOLA

While equity analysts pointed out that the market was ripe for pecking, investor sentiment continued to be weighed down by worries about rising inflation and interest rates.

“The market has already fallen for four consecutive weeks with a total loss of 8.54%. Thus, episodes of bargain hunting could be seen in next week’s trading,” said Japhet Tantiangco, Senior Philstocks Supervisor. Funding for research.

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He noted, however, that “the market could nonetheless move with a bearish bias due to the lingering downside risks to the local economy.” “Investors should look to the upcoming June inflation data. A print of inflation significantly faster than May’s 5.4% could lead to more selling pressure in the market,” Tantiangco said.

For its part, 2TradeAsia.com said: “Talks that inflation could reach 8% of CPI are evolving, although that depends on whether the Russia-Ukraine tiff worsens by the second half of the year. The recent increase in the minimum public transport fare from July 1 will, however, have an impact on the August impression.

Abacus Securities Corporation pointed out that the producer price index jumped 6.9% in May, indicating that more inflation is on the way. He estimates that “inflation may not peak until at least the end of this year”.

“Investors should also pay attention to the peso which is already at the 55 to 1 USD level. Further depreciation is also expected to weigh on the market,” Tantiangco added.

Apart from that, he said the market may also take inspiration from the upcoming labor market figures.

“Finally, concerns about the global economy amid the Federal Reserve’s monetary tightening and rising commodity prices caused by the war between Russia and Ukraine may continue to weigh on sentiment,” he said. he declared.

According to 2TradeAsia.com, “Another round of rate hikes are priced into the consensus: plus 75 basis points by the Fed, plus 50 basis points by the BSP. While both should curb inflation, the latter will continue to put pressure on the peso due to the country’s import deficit.

“While the devaluation of the peso will impact stock values, better that than to risk being behind the policy, which remains a global concern as oil and food inflation (like the shortage of wheat) continues to hit non-producing economies,” he noted.

The brokerage advised investors to “grab the bargains” in “safe” sectors that will offer growth despite lingering concerns. He added that “gradual accumulation could provide maximum long-term value, that is, if short- and medium-term gyrations can be sustained.”

Noting that revenge spending is still in its infancy, as evidenced by the acceleration in consumer lending, Abacus said: “The best way to capture robust household consumption is to play in malls. RLC and SM.”

He pointed out that while revenge spending can also benefit consumer stocks, these can also be affected by higher input costs.

Apart from rising coal prices, Abacus also recommends Semirara (SCC) as it is likely to return to the PSEi equity basket in August due to its rising stock prices in recent months.

COL Financial also has a BUY rating for Semirara as its power generation business will continue to benefit from strong WESM prices this year as much of its generation capacity remains uncontracted.

“We like SCC given that we believe the business should post record earnings this year due to rising coal prices. Despite SCC’s share price rising 109% over the past 12 months, the stock is still cheap,” he added.

Abacus also cited SPNEC as the renewable energy stock to own after the company bagged 70% of capacity offered through the Department of Energy’s green power auction program.

He noted that while these projects will not operate until 2025 to 2026, “awarding contracts is critical to secure funding and significantly reduces the risk of running these projects.”

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