Stocks could bounce after last week’s fall

With major support levels breached during last week’s rout at the local market, stock analysts are hoping for a bounce in share prices with dividends, earnings and, hopefully, a lower inflation rate boosting sentiment.

Eagle Equities Head of Research Christopher Mangun said “next week is the release of February inflation. If we see inflation continue to slow which is most likely to be the case, then this may provide the catalyst that this market badly needs to bounce back and start gaining momentum.”

“Either way, the key is to be selective in which companies and sectors to buy as there will be outliers, even if the market continues to fall,” he said.

Abacus Securities Corporation recommended some bargain hunting among index stocks that have fallen the most in February.

“Of those in the worst performing group, the only one we would pick up at this point is GT Capital Holdings Inc. At -15 percent, it is the second worst performing stock in the index since February 1,” it noted.

Abacus added, “We believe this is overdone because its unit, Metrobank, has fallen by only nine percent over the same period and Toyota has already forecast a recovery by the second half. Metrobank is also forecast to have one of the highest earnings per share growth rates among index members which

should benefit GTCAP.”

The firm is also looking at Bloomberry Resorts Corporation as it approaches its technical support level of 111.00 per share, noting that it fell due to a suit filed by the Bank of Bangladesh.

“Investors, however, should remember that the amount sought to be recovered is only 14.0 billion whereas the market cap lost yesterday was more than twice that at around 110.0 billion. So even if BLOOM were to be made liable for the entire amount (highly improbable in our view), the prospective liability has been more than priced in already,” Abacus said. Top online brokerage firm COL Financial is recommending a buy of three banks: Security Bank, China Banking Corporation, and Metro Bank.

COL said it likes Security Bank because of its attractive valuation and potential margin improvement, China Bank because of the accelerating growth of its lending income, and Metro Bank because its large branch network is seen to generate healthy CASA growth. (JAL)