PSEi may rise on bullish growth, earnings outlook

By Arra B. Francia
Reporter
SHARES MAY move upward in the week ahead as sentiment improves in anticipation of better economic growth figures and earnings results in the last quarter of 2018.
The 30-member Philippine Stock Exchange index (PSEi) dropped 0.95% or 66.89 points to close at 6,968.82 on Friday, pulling the main index 2.4% or 171 points lower on a weekly basis. The services and mining and oil counter declined the most, slipping 5.4% and 4.7%, respectively.
Turnover for the week reached P90.17 billion, with a foreign net buying position of P30.78 billion, as foreigners flocked the P39-billion follow-on offering of San Miguel Food and Beverage, Inc.
Eagle Equities, Inc. Research Head Christopher John Mangun said analysts are optimistic that economic data will improve in the coming months, despite the slower gross domestic product (GDP) figures seen in the third quarter at 6.1%. This is lower than the previous quarter’s revised 6.2%.
He noted that inflation seems to have plateaued, oil prices are dropping, while the peso is now getting stronger.
“Coinciding with the index being at a strong support level, there is a strong possibility that investors will start getting back into this market and begin picking up issues that have been heavily battered this year,” Mr. Mangun said in a weekly market report.
Online brokerage explained the same, saying in a market note that while the view might still be hazy, at least the peso has started to strengthen and crude futures have been on a downtrend.
“Markets should eventually let demand and supply work over time,” said.
Meanwhile, the online brokerage noted that measuring 29 stocks that have reported their nine-month earnings reports, the year-on-year weighted growth is now at 2.9% for the first nine months of the year, and 4.3% for the third quarter alone. This is better than the first half’s 1.43% growth and 2.03% in the second quarter.
The 29 stocks measure account for 57% of the PSEi basket, and 42% to the all-shares index.
“Looking solely on conglomerates, expansion initiatives remain intact despite immediate challenges of higher interest rates. We hold the view of improved 4Q results, which will be aided mainly by hastened investment initiatives,” said.
The companies set to release their third-quarter performances for the week are LT Group, Inc., San Miguel Corp. and its subsidiaries, Ayala Corp., Alliance Global Group, Inc., GT Capital Holdings, Inc., and Puregold Price Club, Inc., among others.
Together, these firms contribute 14% to the PSEi and 19% to the all-shares index.
Mr. Mangun placed the main index’s resistance at 7,200 to 7,500, while support is at 6,800 to 7,000.