Manila Bulletin

Mixed sentiment for stocks this week

- By JAMES A. LOYOLA

While the local stock market is seen to be buoyed by prospects of a big drop in pump prices this week, sentiment may continue to be dampened by the weak peso.

“The local market rode on positive momentum last week but the sustainabi­lity of this rally is questionab­le amid the lingering economic headwinds that may dampen sentiment,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that “This includes the peso’s further weakening, and the supply problems of certain agricultur­al goods, both of which pose upside risks to inƪation.”

“Next week, investors may also watch out for the upcoming US June inƪation report as this would provide clues on how aggressive the Federal Reserve will act in their next policy meeting,” Tantiangco said.

He added that, “investors may also take cues from our upcoming foreign trade, foreign direct investment­s, and Overseas Filipinos’ remittance data.”

Brokerage firm 2TradeAsia.com warned that, “Inƪation printing at 6.1 percent is practicall­y just stronger conƩrmatio­n of another round of hikes this month (at least 50bps) lest the BSP risk being more behind the curve.”

It noted that, “transport CPI is facing more upward pressure from higher minimum fares in July, as well as a higher import bill due to forex disadvanta­ges.”

“On the latter, note that foodto-total imports of the country is at 13 percent last year, one of the highest in the region,” 2TradeAsia. com pointed out.

Meanwhile, it said that, “Feelers for Ʃrst half 2022 results are gradually materializ­ing. The expected prevalent theme will be margin compressio­n, particular­ly for those who import raw materials (as the forex plus freight impacts are twicecharq­ed) and those whose revenue models are dependent on local consumer conƩdence.”

The flipside is that exporters, OFW/BPO driven sectors, and inbound tourism, among others, are safe (if not thrive) in these same conditions.

“Overall, participan­ts should brace for forex devaluatio­n and capital formation to take a backseat to disinƪatio­n efforts. This postpones most growth stories to no earlier than 2023, making underrated but resilient bargain plays more rewarding in the long-term,” 2TradeAsia. com said.

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