Stocks to test ability to reach 7,000 level

This week, investors will see if the local stock market is strong enough to reach for the 7,000 or succumb to profit-taking pressures as the earnings season winds to a close.

“Last week’s run shows that there is positive momentum building in the local market. For next week however, the local market could move sideways as strong profit-taking pressures are seen to start kicking in,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “Some investors may already book gains from the market’s 5-day rally last week. At the same time, investors may take a cautious stance while waiting for the Bangko Sentral ng Pilipinas’ policy decision next week. A 50 basis point rate hike may still put downward pressure on the local bourse.”

“On a positive note, the strong second quarter corporate results may still give support to market sentiment. Based on the quarterly reports that have already been released, the PSEi member companies’ combined net income attributable for the second quarter of 2022 is so far up by 51 percent year-on-year,” said Tantiangco.

He added that, “Aside from these, investors may also take cues from our upcoming OFW Remittances and Balance of Payments data.” “The primary challenge for most corporates is to keep the momentum rolling for the second half of the year, absent extraordinary public spending (election) and given protracted inflation concerns,” said

It noted that, “It is yet to be seen whether the benchmark index has had enough ‘escape velocity’ to trade at a range closer to 7,000. Maneuver by keeping closes and gradually accumulating reliable value plays whose stories will stay true up to 2023-with or without the broader market’s exuberance.”

Abacus Securities Corporation is bullish about the prospects of SPNEC, noting that its “stockpiling of land both suited for solar and within close reach of existing transmission lines, and its power supply contracts put it clearly at the leading edge of the Philippines’ energy transition.”

The brokerage also likes Bloomberry noting that, “The gaming industry is still far from its full strength but BLOOM’s current indicators are already encouraging.”

COL Financial also has a BUY rating for Bloomberry after factoring the increase in its net income forecast.

“We like BLOOM for its market-leading position in mass gaming, supported by the growth in its premium mass segment and slots. Meanwhile, the VIP segment is making remarkable recovery as it does so without the contribution from Mainland Chinese players as borders of China remains effectively closed,” it said.

COL also likes DMCI Holdings also because of an increase in earnings forecasts for DMCI Homes as well as the construction and nickel mining business which translates to a higher income estimate for the diversified engineering conglomerate.

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