STOCK-MARKET OUTLOOK

Last week

SHARE prices resumed a downward trend last week, with the main index closing at 6,100 point level, following the higherthan-expected inflation rate in the United States that led to an off-cycle 75-basispoints increase of the key interest rates by the Bangko Sentral ng Pilipinas.

The benchmark Philippine Stock Exchange index fell 166.56 points to close at 6,195.26 points. The main index is now down 13 percent since the start of the year, and slowly inching toward the bear market territory of 20 percent.

The main index was up on Monday, but was down all the other trading days of the week. The fall of the main index, however, was not as deep when the surprise interest rate increase of the BSP was announced on Thursday.

Daily average trading for the week was low at P4.53 billion. Foreign investors, which account for 39 percent of the trades, were net sellers at P2.58 billion.

Most of the sub-indices closed on the red, led by the broader All Shares index that lost 65.03 points to close at 3,345.73 points; the Financials index gained a measly 0.59 to 1,502.18, the Industrial index climbed 60.02 to 9,374.83; the Holding Firms index plunged 285.68 to 5,751.13, the Property index lost 123.58 to 2,754.35; the Services index was down 44.98 to 1,626.85; and the Mining and Oil index retreated 326.50 to 10,723.85.

For the week, losers edged gainers 178 to 52, and 27 shares were unchanged.

Top gainers were ipeople Inc., Empire East Land Holdings Inc., Jackstones Inc., Manulife Financial Corp., SFA Semicon Philippines Corp., I-remit Inc. and Oriental Petroleum and Minerals Corp. B

Top losers, on the other hand, were Lorenzo Shipping Corp., Mabuhay Holdings Corp., Kepwealth Property Phils. Inc., Liberty Flour Mills Inc., Anchor Land Holdings Inc. and Filipino Fund, Inc.

this week

SHARE prices may continue falling this week, with volatile trading expected to persist in the market, as investors continue to digest last week’s surprise interest rate hike by the BSP.

“While this (rate hike) damages the short-to-medium term outlook on practically any asset that takes on capital, the move should reassure long term holders that policymakers are not taking the risk of carrying over these pains in 2023,” broker 2Tradeasia said.

It said this move leaves room for the peso to depreciate against the dollar to P60 to $1, for corporate margins to deteriorate further in the third quarter and demand cooldown from lower liquidity. The broker said, however, that these issues are better taken head-on now than later.

“Meanwhile, we expect the US Fed to begin an easing cycle in 2023, but reassessment of the ‘central bank put’ for markets may be in order. The risk to our view is that stagflationary dynamics are stickier for longer, especially when we consider the historical patterns to investing under different regimes,” said Sue Trinh, head of global macro strategy for Asia of Manulife Investment Management.

“We maintain our view that the global economy could experience a significant growth slowdown in 2022. With global GDP (gross domestic product) falling further below trend and leverage having risen to record, investors should be more selective to find economies that are the least vulnerable to the potential demand and supply shocks,” she said.

Immediate support for the main index is seen at 6,000 points and resistance at 6,400 points.

stock picks

BROKER Regina Capital Development Corp. gave a hold recommendation on the stock of Ayala Land Inc. as it is now on its sixth-day losing streak and is not showing signs of slowing down anytime soon.

“Indicators are still picking up increasing selling momentum. ALI is already trading at its pandemic lows--a feat considering the rest of the property heavyweights are floating at a safe distance above the mid-march 2020 price shocks,” it said.

“We think the strongest support that we’re seeing right now is at P20,” it said.

Ayala Land shares closed Friday at P22.55 apiece.

Meanwhile, Regina Capital advised trading the range on the stock of BDO Unibank

Inc., the country’s largest lender, as its share price is “very clearly” range-bound between the support at P117.90 and resistance at P122 per share.

The broker said indicators are supportive of sustained sideways movement, despite the stock trading at significant lows relative to its major moving averages.

“It is highly likely that BDO will continue to trade within the said range in the next few sessions. The 4-peso spread is an attractive enough range-play if timed right,” it said.

BDO shares closed last week at P120.70 apiece. VG Cabuag