Stocks may climb ahead of inflation, GDP data

SHARES may continue their upswing in the week ahead as investors look forward to the release of economic figures alongside more corporate earnings from the third quarter.

The bellwether Philippine Stock Exchange index (PSEi) jumped 1.77% or 124.23 points to close at 7,140.29 last Wednesday, before the local market paused for the holiday break.

On a weekly basis, the PSEi was up 1.08% or 75.96 points, taking cues from the positive sentiment on Wall Street. The financials and mining and oil counters led advancers, climbing 2.84% and 1.7%, respectively.

“If the index can sustain this run and break above resistance at 7,200 [this] week then this may signal that the main index has bottomed out and is officially in a reversal to the upside,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market note.

Leads for the week include the release of corporate earnings, including Globe Telecom, Inc.; Ayala Land, Inc.; Manila Water Company; SM Investments Corp.; AboitizPower Corp.; Aboitiz Equity Ventures, Inc.; International Container Terminal Services, Inc.; 8990 Holdings, Inc.; PLDT, Inc.; and Eagle Cement Corp. These companies account for 39% of the PSEi basket and 26% to the allshares index, according to online brokerage 2TradeAsia.com.

So far, Mr. Mangun said corporate earnings have exceeded expectations. “This may be just what the market needs right now to draw investors back in.”

Investors will also be looking ahead to the October inflation data, which the Philippine Statistics Authority will release on Nov. 6, Tuesday. Meanwhile, the thirdquarter gross domestic product (GDP) growth print will be announced on Nov. 8, Thursday.

“Consensus points to 5.8%6.3% for 3Q, with the bulk of the downside explained by July to September weather interruptions on agri output,” 2TradeAsia. com said in a weekly market note, noting that the damages brought by typhoons Gardo (international name: Maria), Karding (Yagi), Ompong (Mangkhut), and Paeng (Trami) are valued at around P29 billion.

“Also note that the National Capital Region’s share to GDP is at 36%, Calabarzon at 17%, and Central Luzon at almost 10%. To meet the low end of the government’s revised 6.5% to 6.8% target this year, 3Q GDP may need to rise 6.4% and 6.8% in 4Q,” the online brokerage said.

Meanwhile, the Bangko Sentral ng Pilipinas said inflation likely stood at 6.2-7% in October, down from its 6.3-7.1% forecast range for September.

Eagle Equities’ Mr. Mangun also pointed to the slowdown of net foreign outflows likely bringing optimism back to the market, after it recorded net buying for the first time since Aug. 30 last Wednesday.

The analyst pegged the PSEi’s support level at 6,800 to 7,000, while resistance could go from 7,200 to 7,500.