Consumer stocks upbeat on GDP results
Continuous growth in the consumer sector has been validated again with the impressive growth in the country’s gross domestic product in the second quarter. This is something that listed consumer firms could benefit from.
The country's GDP grew by 7 percent in the second quarter of this year, while it recorded a growth of 6.9 percent during the first six months of 2016.
"Second quarter 2016 earnings results came to light early August, but while they are important, post-elections earnings performance has more relevance in our view moving forward," said First Metro Investment Corporation President Rabboni Francis B. Arjonillo.
"Our preferred sector, consumer staples, is unchanged. And in light of low yield environment, we have added high dividend stocks. Low P/E [price-to-earnings] or growth stocks would also be attractive," he added.
On the latest technical guide of COL Financial Group, consumer stocks like D&L Industries, Inc. and San Miguel Corp. were both rated 'buy'.
Arjonillo, however, noted that there will be some risks that can make the market more volatile moving towards the second half of the year.
These include the already expected low trading volume because of the ghost month, US Presidential elections in November, and the potential Fed rate hike in December.
For this week, Luis Limlingan, business development head at Regina Capital Development Corp. (RCDC), said he expects the index to continue moving sideways with a narrower trading range of 8,030 to 7,900.
"Last week's bearish trend bias is also expected to start shifting slowly on the neutral side, making a range trade strategy more appropriate this week," Limlingan said.
"However, a cautious trading approach is still advised as some directional indicators remain bearish, albeit rather weak in terms of price momentum," he added.
Philippine shares ended last week's trade on a negative note, with the Philippine Stock Exchange index (PSEi) losing 22.06 points on Friday, or 0.28 percent to 7,930.75.
"Asian stocks fell, erasing earlier gains and sending the regional gauge toward its biggest weekly drop in a month. The market lacks momentum and has been driven by liquidity arising from loose monetary policies by central banks around the world, rather than improving economic fundamentals," Limlingan said.
"Locally, companies reassessed earnings releases as practically all heavyweights released their later financials. Lastly, investors digested the latest BoP [Balance of Payment] data, which showed us incurring another surplus for July, but still around $1.2 billion short of the BSP's year end target," he further said.