Positive outlook for property, energy
The market will possibly trade sideways this week as the Philippine economy’s growth experienced a slowdown but this doesn’t change the outlook for stocks within the property and energy sectors which may still perform better in the next few days.
In its recent outlook, DA Market Securities, Inc. highlighted the property and energy sector as industries that will continue to show good performance this year.
On property, the brokerage cited real estate services firm CBRE Philippines’ report on the Philippine property sector’s performance during the first quarter of the year, wherein the latter specified that the supply and demand across the office, residential, retail and industrial markets remain positive, especially with the upcoming ASEAN integration.
DMCI Holdings Inc., which has a significant portfolio of real estate projects under its units DMCI Homes and DMCI Project Developers, Inc., was also given a ‘buy’ recommendation by DA Market.
Among the top gainers during the last trade were also real estate players such as Cityland Development Corp. and Megawide Construction Corp.
DA Market Securities also highlighted a positive development within the energy sector where the National Renewable Energy Board has already endorsed a lower feed-in tariff rate for the additional 200-megawatts of wind projects at P8.49 per kilowatthour (kWh). This doubles the approved installation target to 400 MW.
The brokerage then gave a ‘hold’ recommendation on Manila Electric Company’s stocks.
“ERC [Energy Regulatory Commission] recently approved the 20-year power supply agreement of Meralco and San Buenaventura, assuring the power plant of an offtaker for its entire 455MW output. [Meralco unit] RP Energy to proceed with the construction of Subic coal plant following the favorable ruling of the Supreme Court,” DA Market said.
Overall, the market may still feel the effect of the slow economic growth during the first three months of the year and would, thus, move sideways.
Accord Capital Equities, Corp. analyst Justino Calaycay said over the course of the next months, market participants should be on alert for possible revisions of the forward outlook in light of the first quarter Gross Domestic Product results, which showed a slower growth of 5.2 percent.
On Thursday, the Philippine Stock Exchange index initially traded within a narrow range in the first halfhour, but plunged below the 7,500-mark, extending losses for a 6th straight session, after the government announced that GDP growth.
On Friday, Philippine shares recovered immediately after a hard fall on Thursday, which was due to the slowest GDP growth recorded since 2011.
PSEi specifically ended the week with additional 75.43 points, or an increase of 1.005 percent to close at 7,580.46, while the wider all shares gained 36.43 points, or 0.83 percent to 4,360.81.