Holding firms hot with profit results
While market participants are expected to watch out for the third quarter earnings results, stocks that may be ideal to take hold of are those in the holding firms, which have provided a good boost to the overall movement of local equities in the past three months.
In the latest Market Call Research of First Metro Investment Corporation (FMIC), it said that with high volume and continued defiance of support levels, the breakout confirms the new bull run of the Philippine Stock Exchange index (PSEi).
According to it, foreign fund managers, wary of overvalued US stocks and bonds, appear to be favoring emerging market stocks, with Philippines among the frontrunners.
Moving forward, it said that upcoming third quarter income reports should be above average for the uptrend to be sustained.
"Although slightly higher inflation both locally and abroad appear likely to emerge due to the disruption caused in the petroleum products supply chain abroad, top Philippine firms should continue to post slightly above-average earnings in the third quarter to sustain the upward trend. Disappointment over third quarter earnings reports would scuttle the runup," FMIC said.
During the third quarter, FMIC emphasized the 4.2 percent increase recorded in the holdings sector, which was led by certain stocks like LT Group, Inc. (LTG), Ayala Corporation (AC), Alliance Global Group, Inc., DMCI Holdings Inc. (DMCI), and SM Investments Corp. (SMIC).
LT Group particularly led the sector with a hefty 19.6 percent gain during the period as it is expected to regain market share in cigarettes after lowprice producer Mighty Corporation was bought out by Japan Tobacco, Inc. (JTI).
AC, on the other hand, posted double-digit gains of 14.1 percent after acquiring 10 percent or 93.3 million shares shares) at Mynt in order to expand its online financial services, while AGI jumped by 12.2 percent after announcing plan to buyback R5 billion worth of its shares.
Meanwhile, DMCI increased significantly by 10.6 percent, as its mining, construction, and homes segments consistently showed good performance.
SMIC also rose by a whopping 10 percent during the period after opening its 64th mall located in Puerto Princesa, Palawan.
Last week, Philippine shares weakened by 125 points week on week, or 1.48 percent, to close at 8,295.
"Local equities paused for breather during the week, as some investors seized on the latest rally ahead of holiday breaks in November. Uncertainty on Trump’s tax plan overhaul prompted the Phillippine peso to gyrate to as much as R51.77:$1," online brokerage 2TradeAsia.com said.
This week, it said that very little is expected with a threeday trading session this week, as investors take their cue from headlines from abroad.
"While local equities have started to breathe from its latest run-up, look on listed shares’ inner character potential and veer away from shares that seem mesmerizing, but superficial fundamental strength. Attention could shift in stocks fit for day-trades, specifically second- and thirdtiers," 2TradeAsia.com further said.