Earnings, MSCI to influence market

Trading this week is seen to continue to be influenced by corporate earnings reports as well as MSCI's quarterly rebalancing.

“Even as potential movements are hard to predict, especially without a subscription to MSCI data, we believe there is potential for a significant number of deletions from the small cap index,” noted Abacus Securities Corporation.

It explained that, “since PH equities have significantly underperformed relative to emerging market and global peers YTD, they have generally fallen farther away from the dynamic threshold that determines inclusion or deletion from MSCI's benchmark indices.” Because of this, Abacus advised investors to steer clear of Cemex Holdings Philippines, Prime Leisure Corporation, East West Bank, Nickel Asia, First Philippine Holdings Corporation, MacroAsia and Integrated MicroElectronics Inc.

“On the other hand, there is one possible addition to the standard index: San Miguel. At a market cap in excess of 1400 billion and a float of 15 percent, SMC might just barely scrape through and become a large cap member,” Abacus said.

This it suggested that “it wouldn't hurt to hold SMC now considering that it just beefed up its war chest by close to P40B billion.”

For its part, online brokerage 2Trade Asia said firms reporting third quarter results also bear watching this week including members of the Lucio Tan group, the San Miguel group, Ayala Corporation, GT Capital, and Puregold.

COL Financial and Abacus continue to recommend a BUY for Wilcon Depot after it reported earnings that were ahead of estimates.

BDO Chief Market Strategist Jonathan Ravelas said “last week’s close at 6,968.82 highlighted the 6,900 support levels provided a good fight. Expect another attempt towards the 7,300 levels. Should the 6,900 levels fail to support the market, the next key levels are at 6,500/6,800 levels.”