STOCK-MARKET OUTLOOK

Last week

SHARE prices gained for the third straight week, with the main index reaching the 6,400-point level, mainly on bargain hunting.

The benchmark Philippine Stock Exchange index gained 89.57 points to close at 6,405.50 points.

The main index was down at the start of the week, but gained for three straight sessions, declining only on Friday, when the government reported that the country's inflation rate reached 6.4 percent in July, the highest in four years. The figure also exceeded the market consensus of about 6.2 percent.

Analysts said the market had already priced in the July inflation rate, and that there was optimism from investors after the Bangko Sentral ng Pilipinas (BSP) hinted that the increase in interest rate by 50- to 75-basis points during its policy meeting later this month may be the last for the year.

Average daily trading value for the week was higher at P6.71 billion, but mainly as a result of Friday's higher volume of trade valued at P12 billion, as investors made their asset trade ahead of the rebalancing of the benchmark index on Monday.

All other sub-indices ended mixed. The broader All Shares index gained 33.24 points to 3,432.06 points, the Financials index lost 11.76 to 1,520.62, the Industrial index surged 331.30 to 9,593.71, the holding Firms index climbed 137.47 to 6,072.20, the Property index added 25.83 to 2,858.04, the Services index fell 0.54 to 1,673.71 and the Mining and Oil index retreated 3.51 to 11,439.19.

For the week, losers edged gainers 101 to 114 and 29 shares were unchanged.

Top gainers were Concrete Aggregates Corp. B, Forum Pacific Inc., ACE Enexor Inc., Atok-big Wedge Co. Inc., Ayala Corp. and Vantage Equities Inc.

Top losers were Imperial Resources Inc., Liberty Flour Mills Inc., Philweb Corp., ipeople Inc., Security Bank Corp. and SFA Semicon Philippines Corp.

this week

SHARE prices may continue to decline this week after three consecutive weeks of increases.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said the market could move "on a cautious tone" as investors continue to digest the corporate earnings reports while at the same time, deal with monetary policy concerns.

“Investors are also expected to watch out for our second quarter GDP data and June labor data for clues on the health of our economy. The robust first half corporate results may still give investors’ sentiment a boost,” he said.

“The market may deal with concerns over a possible aggressive policy action by the BSP in their meeting this August however following the July inflation print which came in at 6.4 percent. Concerns over a possible further aggressive tightening by the Federal Reserve may also weigh on sentiment following the US’ strong July jobs report."

Broker 2Tradeasia said from the consumer standpoint, the mediumterm inflation outlook remains elevated, but on a long-term basis, supply drivers are looking to be more favorable for corporates.

“The index seemingly moves from strength to strength; be reminded that there are timing differentials to macro-events, earnings and asset prices. While this makes market dilligence blurry, this opens opportunities to trade oversold but high quality securities. Aim for hopeful but informed farsightedness,” it said

The main index support is now seen at 6,400 points while resistance is seen at 6,500 to 6,600 points.

stock picks

BROKER COL Financials Inc. picked real estate investment trust (REIT), such as MREIT Inc. and Citicore Energy REIT Corp. (CREIT), and other fixedincome paper, as their favorites as these will perform better than other stocks.

“This is because of course, as interest rates go up and you have an expectation to get a fixed income from bonds and REITS. Automatically their price will go up. I say if you're going to buy other alternatives with yields, you won't get the same price,” April Lynn Tan, the broker's chief equity strategist said.

“If I were to buy an asset class or if I were forced to pick an asset class probably I would buy bonds and REITS. First I will prioritize them, because they would perform better than common stocks,” she said.

“So looking at common stocks, what I would do first, probably I would take profits on commodities because as you can see commodity prices are going down."

Mreit shares closed Friday at P15.70 apiece and CREIT shares were last traded at P2.39 apiece.