Last week
Share prices plunged last week as geopolitical tensions in the Middle East dampened investor sentiment.
The benchmark Philippine Stock Exchange index fell 216.39 points to close at 6,443 points.
The main index lost 4 percent during the first two days of trading, but recovered some of its losses in the next two days.
“A very unstable week in capital markets is ending with heightened geopolitical tensions in the Middle East, as Friday explosions in Iran threaten to push deeper conflict in the region,” broker 2TradeAsia said.
Volume of trade reached an average value of P5.48 billion. Foreign investors, which accounted for more than half of the trades, were net sellers at P3.28 billion.
All other sub-indices ended in the red. The All Shares index fell 95.85 points to close at 3,421.55 points, the Financials index declined 4.17 to 2,036.56, the Industrial index shed 333.97 to 8,375.57, the Holding Firms index decreased 248.79 to 5,952.36, the Property index plunged 147.86, the Services index dropped 35.17 to 1,822.06 and the Mining and Oil index was down 61.53 to 8,222.62.
For the week, losers led gainers 159 to 69 and 20 shares were unchanged.
Top gainers were Keppel Philippines Properties Inc., Keppel Philippines Holdings Inc. A and B shares, Kepwealth Property Phils. Inc., Concrete Aggregates Corp. B, Anchor Land Holdings Inc., Atok-Big Wedge Co. Inc. and Global-Estate Resorts Inc.
Top losers, meanwhile, were ABS-CBN Corp., Roxas and Co. Inc., Jackstones Inc., Integrated Micro-Electronics Inc., DigiPlus Interactive Corp., Metro Alliance Holdings and Equities Corp. A and Metro Retail Stores Group Inc.
This week
Share prices may improve this week, but mostly on bargain hunting as negative sentiment still pervades in the market.
Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc. said the bourse is now near its 6,400 support level. It has also broken below its 200-day exponential moving average, adding to the bearish technical indications.
“With last week’s drop, the market is now at even more attractive levels. Hence, episodes of bargain hunting could be seen in next week’s trading. However, a strong and sustainable rebound may not be seen yet amid prevailing worries.”
The main concern next week may still be the Middle East tensions, particularly the course of action that Iran would take following the supposed attack from Israel. A retaliation by the former may send the market lower, he said.
“Inflation concerns are also expected to weigh on the market amid inflationary risks at play including rising oil prices, tight energy supply, El Niño’s impact on our agricultural production, and weakening peso. Finally, investors are expected to watch out for catalysts that could bring back the bullish sentiment.”
2TradeAsia said it expects a shift from growth and deployment to capital preservation while risks abound.
“Consequently, passive income making plus bargain hunting are likely to outperform in the near-term, at least while growth stories are being ‘re-cooked’ amid new variables for the second half of the year. The nature of markets is that prices fluctuate; corrections are painful, but they are surmountable.”
The market’s support is seen at 6,400, while resistance is at 6,700.
Stock picks
Unicapital Securities Inc. has made a buy rating on Digiplus Interactive Corp. as it is at its early legs of “bright growth prospects,” capitalizing on its core digital BingoPlus game.
“Although the stock is trading at a premium relative to its peers, we believe this is justified by its strong earnings growth, supported by its growing user base.”
It gave a target price on the stock at P14.55 apiece, with a potential upside of 46 percent.
DigiPlus shares closed last week at P9.60 apiece.
Meanwhile, it also gave a buy rating on the stock of Ayala Land Inc. (ALI) as growth prospects are still intact.
“ALI intends to pivot towards premium residential brands, which is less sensitive to interest rate fluctuations. We remain confident in the company’s growth trajectory, notwithstanding the possibility of delayed policy rate reductions,” the broker said.
“This year, we forecast ALI’s residential revenues to grow by 11 percent year-on-year with sales reservation of P125.3 billion, that should translate to a growth of 10 percent year-on-year.”
Ayala Land was last traded at P27 apiece.