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Investors in the local stock market hope that share prices will sustain last week’s gains as the government is set to announce the November inflation rate this week, which could support a rate cut by the Bangko Sentral ng Pilipinas (BSP).
“Whilst hard fought, positive sentiment still took over the local market last week, allowing it to extend its gains and even close above the 6,000 level. The bourse is still considered on a downtrend however as it has not yet surpassed its Oct. 20 peak of 6,141.87,” said Philstocks Financial Inc. research manager Japhet Tantiangco.
He noted that, “Despite last week’s rally, the local bourse is still undervalued. As of last Friday’s closing, the market is trading at a price-to-earnings ratio of 10.1 times, below its last five years’ average of 17.3 times.”
This week, investors are expected to look toward upcoming economic data for clues that would aid them in their decision-making.
Investors are expected to look toward the Philippines’ November inflation data, with a low print expected to boost sentiment as it would support BSP rate-cut expectations.
Tantiangco said investors may also take cues from S&P Global Philippines’ manufacturing purchasing managers’ index (PMI). Finally, investors may monitor the peso’s movement, with a further appreciation expected to help the local market.
Chinabank Securities Corp. research director Rastine Mercado said, “Upcoming data releases may drive volatility amid favorable technical conditions. In our view, the uptick on Friday and favorable technical conditions in many index issues set the stage for a possible next leg rally [this] week.”
However, he warned that, “we could see accompanying volatility given upcoming data releases given their influence on offshore and local monetary policy outlooks.”
Assuming data releases point to a continued softening in the United States (US) labor market and benign Philippine price pressures, Mercado said the Philippine Stock Exchange index (PSEi) could decisively breach the 6,065 to 6,100 resistance level.
Meanwhile, 2TradeAsia.com said, “The index remained waltzing around the 6,000 zone, with intraday moves highlighting its attempt to disentangle from corruption headlines.”
It noted that, “Short-term catalysts include Nov. 30’s nationwide protests, which could spike volatility but underscore long-term reforms badly needed to finally reduce country risk that has plagued equities.”
“The BSP’s final rate cut (on Dec. 11) is supported by still-benign inflation but underwhelming gross domestic product (GDP) print; expect policy to double-down on accommodative measures to buoy confidence, especially on the infra and capital formation side,” the brokerage said.
It advised that, “Vigilance on protest outcomes and data releases will be key; use dips for tactical entries. Stay disciplined—if the past weeks are to go by, there are some rebound gains that can be made despite what the broader charts show.”
For stock picks, Abacus Securities Corp. recommends investors to be overweight on SM Investments Corp. (SMIC) due to the high earnings potential of its majority stake in the upscale Susana Heights joint venture (JV) with SM Prime Holdings Inc. (SM Prime) from 2026 onwards.
The brokerage also sees SM Prime as a long-term buy despite current foreign selling due to the additional income from the Susana Heights project as well as future earnings from the Pasay reclamation project.
Meanwhile, Unicapital Securities has a BUY rating for Manila Water Co. Inc. as its nine-month core earnings came in line with expectations.
“Furthermore, following the retirement of Jose Victor Emmanuel de Dios, we view the appointment of Roberto Jose Locsin as president and chief executive officer (CEO) as a positive move for the company.
“This transition signals continuity, reinforcing the sustained focus on operational efficiency, international expansion, and internal cost rationalization—initiatives Locsin has championed since Prime Infrastructure Capital Inc.’s (Prime Infra) acquisition in 2021,” the brokerage said.
