PSEI rises above 7,000 level

by James A. Loyola

The local stock market breezed past the 7,000 resistance level as foreign funds bought Philippine shares on expectations of milder US rate hikes.

The main index rose 93.94 points or 1.35 percent to close at 7,045.48, after breaching 7,100 intraday, as Banks led the rally while the Services and Mining sectors yielded to profit taking. Volume was higher at 1.11 billion shares worth P10.23 billion as gainers beat losers 138 to 65 with 46 unchanged.  

“Philippine shares touched the 7,000 level after so many months as foreign funds continued to make bets into our economy, as conviction remained high that the country would be one of the best performers in 2023,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

Philstocks Financial Assistant Research Manager Claire Alviar said “The local bourse surged amid expectation that the Federal Reserve will be less aggressive in its rate hikes following the cooled inflation in the US.”

She added that, “The strengthening of the peso against the US Dollar lifted the market as well. Moreover, foreigners helped lift the index, registering a net inflow of P1.08 billion.“

Peso nears P54:$1; PSEi rebounds

By Ed Paolo Salting  and Eireene Jairee Gomez

THE peso neared the P54:$1 mark on Monday while the stock market also rebounded to post a strong start to the week.

The currency gained 53 centavos to close at P55.11 to the US dollar, gaining for a third straight trading day.

The benchmark Philippine Stock Exchange index (PSEi), meanwhile, recovered from Friday's 1.38-percent drop by gaining 122.27 points, or 1.83 percent, for a 6,790.24 close.

The broader All Shares followed with a 55.90-point, or 1.59-percent rise, to 3,568.97.

Rastine Mercado, China Bank Securities head of research, said positive sentiment abroad had spilled over to local markets.

"Optimism continued to run high given expectations of a slowdown in rate hikes from the US Fed and an improving outlook for China and Asia," Mercado said.

"The market is now within striking distance of the 6,800-6,850 resistance, which coincides with the threshold for bull market territory (20 percent up from recent lows of around 5,700 in early October 2022)."

Philstocks Financial Inc. research associate Claire Alviar, meanwhile, said, "Investors in the US reacted positively after the US non-manufacturing PMI (purchasing managers' index) contracted, tempering rate hikes expectation this year."

Locally, "foreigners also helped lift the market as it registered a net inflow of P283.83 million."

Stocks to continue riding on higher earnings

by James A. Loyola, MB

The local stock market is seen to continue riding higher on positive corporate earnings reports as well as the firmer Peso although weak volume in past days call for caution.

“This week, the local market may extend its climb with anticipation of third quarter corporate earnings giving a boost to sentiment,” said Philstocks Research Manager Japhet Tantiangco. 

He added that, “The Peso’s position above the 58.00 per US Dollar level, if sustained may also strengthen the market’s positive momentum.” The local market has been on a positive momentum after touching its trough at 5,699.30 last October 3, 2022.

Tantiangco noted though that, “From October 3 to date, net value turnover has only been averaging P3.97 billion per day, below the year-to-date average of P5.99 billion, implying weak conviction in the market’s climb. Thus caution is still advised in our trades.”

This sentiment was also shared by 2TradeAsia.com which said that, “While the trek north of 6,000 was welcome, the market is left wanting of stronger impetus to carry it convincingly towards 6,500-6,700.” 

“Investors are also expected to look towards the S&P Global Philippines’ Manufacturing PMI, Inflation data, and foreign trade data for clues on the local economy,” said Tantiangco.

2TradeAsia.com said investor focus will be pulled in multiple directions, given macro events unfolding for the month.

“The US midterm elections on the 8th, while not groundbreaking, might cause some volatility especially if the US chambers split (i.e. delays in 2023 stimulus, etc.),” the brokerage said.

It added that, “On the 10th, third quarter GDP will be reported and, while expectations have been tempered (low to mid-6 percent), the print will give funds a bigger sense of the impact of policy tightening and will be a guide to better project the fourth quarter up to 2023.”

Meanwhile, 2TradeAsia.com said that, “in mid-November, another round of Fed rate hikes are anticipated (estimated at 75-bps); the BSP is expected to mirror the Fed on the 17th to protect the peso.” Thus, it advised investors to “Range-trade while funds seek inspiration, noting that intraday selling pressure makes settling for modest gains the more optimal play for now.”

For stock picks, Abacus Securities Corporation is looking at Puregold Price Club because “We are anticipating a stronger second half of 2022 for PGOLD with revenge spending and reopening theme still in play after consumers being locked in the pandemic for two years.” 

“We do acknowledge the challenges presented above (peso, inflation affecting consumer spending) which will eat into the company’s margins and profitability. However, we still expect numbers to remain strong and possibly go beyond management’s expectations of consolidated revenues growing 7 to 9 percent.” It added.

The brokerage noted that, “We also have mentioned prior our preference to remain defensive and be choosy in picking stocks. And PGOLD makes a case for this with the company’s resilience in its line of business on essentials and the stock currently trading at all-time low valuations… Accumulate.”

Abacus is also advising investors watch Wilcon Depot and buy its stock when the price weakens as it is one of the best performing index stocks since the start of 2020.

While its price-to-earnings ratio is the highest in the PSEi and it is the second most expensive home improvement play in the region, “Upgrades are imminent and this will help valuations but the stock will still be pricey.”

“We do believe the premium, especially over its regional peers, is partly justified by the very strong YTD results and expanding margins,’ said Abacus adding that, “we would prefer to wait for dips before buying.”

For its part, COL Financial said it is raising its fair value for Wilcon to P31.70 per share from P25.20 a share “as a result of the changes in our forecasts and after rolling over our estimates to 2023.”

“After factoring in our higher topline and gross margin assumptions, our net income forecasts for FY22 and FY23 increased by 6.2 percent and 6.0 percent, respectively,” it said but noted that, “Despite the upgrade in our estimates, we maintain our HOLD rating on the stock due to current valuations.”

PSEi drops 2.40% on impending Fed rate hike

By Ed Paolo Salting, Manila Times

THE Philippine Stock Exchange (PSE) plummeted on Wednesday by 155.11 points, or by 2.40 percent, to 6,319.42 as the local market was affected by the negative sentiment from last night's performance of the US bourses.

Regina Capital Development Corp. Managing Director Luis Limlingan, Rizal Commercial Banking Corp. chief economist Michael Ricafort and Philstocks Financial Inc. senior research analyst Japhet Tantiangco all agreed that investors are worried over an aggressive rate hike by the US Federal Reserve Bank.

The further depreciation of the Philippine peso against the United States dollar and higher US Treasury yields added to the market's bearish sentiment.

"The rate-setting Federal Open Market Committee will conclude its two-day meeting on Wednesday. The market is betting on a 75-basis-point rate hike, according to the CME Group Inc.'s FedWatch tool. Today's moves also came as investors digested another important inflation reading of May's producer performance index, which showed that wholesale prices rose 10.8 percent, and hovered near a record pace," Limlingan explained in his analysis.

Meanwhile, Vista Land's real estate investment trust (VREIT) debuted on the PSE and Limlingan and Ricafort noted that it would have finished much higher if it were not for the current market sentiment.

They said that the company aims to maintain high occupancy rates and quality tenants with particular focus on those offering essential goods and/or services. Also, its weighted average lease expiry of 5.09 years is quite impressive while the relatively high occupancy rate for malls was at 90 percent as of end-2021 despite the pandemic.

VREIT closed unchanged at its initial public offering price of P1.75 per share, and saw an intraday low of P1.59.

Other Asian bourses ended up mixed as Japan descended again by 1.14 percent, China climbed 0.50 percent, Hong Kong up 1.14 percent, Korea down by 1.83 percent, Vietnam dipped at 1.33 percent, Indonesia inched downwards by 0.61 percent, Thailand slid by 0.59 percent and Singapore slipped by -0.10 percent.

Trading remained anemic with net value turnover posting P5.84 billion, below the year-to-date average of P6.80 billion.

Stocks fall on concerns over slowing economy

by James A. Loyola, Manila Bulletin

Local share prices fell on continuing concerns over China’s economy and risks posed by Russia’s invasion of Ukraine.

The main index dropped 116.11 points or 1.66 percent to close at 6,863.91 as the Mining and Oil counter led all sectors in the retreat. Volume jumped to 816 million shares worth P8.78 billion due to a block sale of ALI shares as losers swept gainers 138 to 49 with 43 unchanged.

“Philippine shares again closed in the red on global economic slowdown concerns brought by surging COVID19 cases in China, a high inflationary environment, and a statement from a top Russian official that the threat of nuclear war is real,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

He added that sentiment also suffered after “Moody’s Analytics trimmed its Philippine GDP forecast this year to 6.1 percent (versus 6.4 percent March projection) due to the impact of slower global demand and faster inflation on the economy.”

Philstocks Financial Senior Supervisor for Research Japhet Tantiangco said “The local market declined further on the back of the negative spillovers from Wall Street.“

He explained that “This comes amid global economic slowdown worries as China’s economy continues to deal with its worsening COVID-19 situation, while the Russia – Ukraine war poses risks of further escalation.“

“Wednesday’s decline is also attributed to investors’ reaction over the earlier rate hike signals from the Bangko Sentral ng Pilipinas” Tantiangco added.

Stocks jump after oil prices eased

by James A. Loyola, Manila Bulletin

The local stock market rose with its regional peers as oil prices eased.

The main index jumped 134.92 points or 1.93 percent to close at 7,124.80 as Conglomerates led the advance while the Mining and Oil dropped along with commodity prices. Volume was lower though at 3.35 billion shares worth P7.59 billion as gainers beat losers 108 to 80 with 47 unchanged.

“Philippine shares posted sharp gains on as the recently surging commodity prices, especially oil, cooled off while the war in Ukraine continues,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

He noted that, “ Oil prices dropped in a sudden move on Wednesday, giving back some of the rally this month amid supply disruptions stemming from Russia’s invasion of Ukraine.“

Philstocks Financial Research and Engagement Officer Claire Alviar said “the local bourse jumped as the global oil prices fell sharply overnight.”

She explained that, “At home, being one of the net importers of oil, the decline of oil prices spurs optimism as it may somehow slow down the increase of oil prices in the short run.”

PSEi breaches 7,300 in steady climb

by James A. Loyola, Manila Bulletin

The PSEi continued to rally and has breached 7,300 level, as stocks were buoyed by positive developments locally and in the US.

The main index gained 14.64 points or 0.20 percent to close at 7,311.72 although sectoral indices were evenly mixed with the Mining and Oil and Holding Firms counters posting strong performances.

Volume improved further to 1.06 billion shares worth P10.15 billion as gainers beat losers 105 to 85 with 55 unchanged.

“Philippine shares closed slightly higher tracking the performance of the US market as investors parsed the Fed’s latest Beige Book reading,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

According to the report the US economy is growing at a modest to moderate pace, but remains under pressure from inflation and labor shortages.

“‘Meanwhile, Asian markets mostly shook off the China blues for a steady trading session,” he added.

Philstocks Financial Senior Supervisor for Research Japhet Tantiangco said “The local market climbed further as the improvements in our country’s COVID-19 situation continued to provide support to sentiment.”

He noted that, “Investors also cheered the Department of Energy’s proposal to temporarily suspend the fuel excise taxes which if pursued, is seen to mitigate the inflationary pressures in the country.”

Tantiangco said “Foreign investors also helped in Thursday’s gains with net inflows for the day amounting to P304.53 million.”

Philippine Penny Stocks Spark Gold Rush

By 

Cecilia Yap

 and 

Ian C Sayson

• There’s a gold rush in Philippine telecom minnows and everybody’s invited. For now.

President Rodrigo Duterte’s decision to award a new telecommunications license has sparked a frenzy as speculators bid up the prices of once-forgotten penny stocks which may benefit from the shakeup of the sector’s current duopoly of PLDT Inc. and Globe Telecom Inc.

NOW Corp.’s market value has surged almost 400 percent so far this year on wagers the broadband service provider will be part of a new consortium to challenge the incumbents. Its market value of about 21 billion pesos ($403 million) is 8,400 times the 2.5 million pesos in net income it posted in 2016. Earlier this month, it became more valuable than GMA Network Inc., the nation’s second-largest broadcaster, which earned 3.6 billion pesos during the same period.

EasyCall Communications Philippines Inc., a former 1990s provider of paging services that’s seeking to build a wireless broadband network, has risen over 1400 percent since the end of November. Transpacific Broadband Group International Inc., a satellite station operator, is up more than 200 percent over the same period. The benchmark Philippine Stock Exchange Index has eked out a miserly 3 percent gain in comparison.

The ongoing interest was evident in trading Wednesday. EasyCall was up 49 percent and Transpacific 13 percent as of 11:39 a.m. in Manila. The benchmark stock index was down 1.2 percent.

The Philippines will bid out a new telecom license in the first half of 2018, a process set in motion by Duterte’s invitation in November to Premier Li Keqiang for a Chinese company to invest in the sector and improve services. The bidding was moved to May from an original plan of March upon the request of contenders, said Eliseo Rio, acting head at the Department of Information and Communications Technology.

The proposal sparked investor interest in potential domestic partners for any Chinese bidders, and NOW, EasyCall and Transpacific Broadband are among the 10 biggest gainers this year in the all-share index. Bets that they can leverage their franchises, existing operations and listed status to potential overseas bidders will likely continue until the bidding, according to Jonathan Ravelas, chief market strategist at BDO Unibank Inc.

“This gives hope to small, listed telecommunication companies that they could be the third major player,” Ravelas said. “The government probably wants a company that can be up and running immediately.”

Read: Terms of telco bidding to be changed, perks to be added

The speculation has even spread even to some real estate shares, according to market participants.

Golden Haven Inc., a builder of memorial parks that expanded into mass housing, has seen its shares surge over 1,300 percent this year on speculation its billionaire owner Manuel Villar will use the company to list his telecom venture that will bid for the frequencies the government will sell. Even Villar’s Starmalls Inc., a shopping mall builder, has risen over 170 percent in 2018 on the same speculation.

However, to some in the market, the rally has gone too far and there is a growing risk of a pullback. Rachelle Cruz, an analyst at AP Securities Inc. in Manila, is cautious on the sector given the speculative nature of the moves, even for shareholders of the company which gets the license.

“Share prices are already stratospheric and will likely collapse once the bidding is over,” she said. “Even the winner would see its stock collapse because raising the capital it needs will lead to massive dilution while its first five years of operations isn’t likely to be profitable.”

Gains in the stocks will moderate as the bidding nears, with the realization that the winner can’t build the business overnight, said Paul Michael Angelo, an analyst at Regina Capital Development Corp. “The incumbents will put up a tough competition,” he said.

As for the companies themselves, they aren’t convinced by the naysayers, preferring to highlight the logic they see behind the moves.

“There is irrational speculation, there’s rational speculation,” NOW President Mel Velarde said of his company which this month won a renewal of its franchise for another 25 years. “In this particular space, we are in the right spot and we want to seize this opportunity.”

— With assistance by Clarissa Batino