Stocks could see more profit taking – Manila Bulletin
The local stock market is expected to remain volatile this week despite growing optimism that the country’s economy will recover amid the surge in COVID cases fueled by the Omicron variant.
“Next week, we may see selling pressures taking over the market after its 3.57% rally last week. Said recovery may not yet be sustainable as investors are expected to maintain a cautious stance” , said Philstocks Financial senior supervisor for research Japhet Tantiangco.
He noted that “this is because economic losses continue to mount as Alert Level 3 restrictions have been extended in the National Capital Region and other key economic areas, and have been put on hold. implemented in more parts of the country”.
“At the same time, COVID-19 cases are still on the rise, keeping the risk of tighter social restrictions at the dinner table going,” Tantiango said.
He added that “offshore concerns, particularly possible monetary tightening by the Federal Reserve this year amid high inflation in the United States, may also continue to weigh on sentiment.”
Online brokerage 2TradeAsia.com said Fed Chairman Jerome Powell announced a faster-than-expected interest rate hike was on the table, after US inflation in December hit 7 %.
“This shift in stance was reflected in Fed officials’ expectations for up to 3 rate hikes in 2022, compared to zero to at most one rate hike communicated in August 2021,” he noted.
The brokerage added that “emerging markets now face high inflation from their own economies and currency volatility, at a time when governments are taking on more debt than usual – not thanks to the pandemic. “.
He pointed out, however, that “Hawkish behavior by the Fed does not always mean bad luck. First, as long as US rate hikes are well telegraphed and effective in curbing inflation, the regional negative impact should be mild and less difficult to circumvent. Second, local assets have some headroom relative to their regional counterparts as the CPI moderated in December and the BSP is stronger with several intervention modes ready to go.
2TradeAsia.com also noted that “there are arguments that the country has reached or is about to reach the top of the Omicron infection curve. Trends from recent trading sessions show that the markets seem to be in agreement. »
“In an ever-changing environment, flexible trading strategies reign supreme – these include selecting inflation hedges when needed and switching from highly cyclical growth play exposure to defensive strategies when the COVID-19 curve is steepening,” he added.
Betting on a recovery from the Omicron surge and rising election spending, COL Financial recommends consumer stocks Puregold Price Club and Robinsons Retail Holdings Inc.
COL said it was also cautiously optimistic about the recovery of the real estate sector after Omicron and looked favorably on Ayala Land, Megaworld and Robinsons Land Corporation for reopening.
He also noted that banks will benefit from the continued recovery of the economy and names BDO Unibank, Metrobank and Bank of the Philippine Islands as his top picks for the sector.
Abacus Securities Corporation is also bullish on the local banking sector as its non-performing loan ratios are below projections, “which is one of the reasons we expect loan growth to return to double-digit growth this year”.
He also noted that “BDO expects loan growth of 10% to 12% this year. We believe this is entirely doable, partly due to a weak base over the past 2 years and due to the expected growth in the economy.
“We expect strong earnings momentum this year as a higher loan portfolio will be complemented by higher net interest margins and lower loan loss provisions. We therefore reiterate our overweight to the sector and for BDO itself,” Abacus said.
Meanwhile, he said: “We believe FGEN would benefit the most from the ongoing yellow alert in Luzon. With stocks trading at just 6.5 times the 2022 price-to-earnings ratio, FGEN appears to be a low-risk buy.
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