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Market Recap: Stock market last week
Last week, the Philippine stock market ended at 6,780.13, up 103.48 points (+1.55% week-on-week), after a mixed trading period shaped by both local and global developments. Early gains were driven by opportunistic buying and optimism following dovish statements from the Bangko Sentral ng Pilipinas (BSP) keeping the possibility of rate cuts on the table, which lifted the market from oversold levels. Investors also digested the conclusion of the 3Q 2024 earnings season, which showed mostly stable corporate performance and aligned with market expectations. A strong midweek rally saw advances across all sectors, buoyed by heavyweights and renewed risk appetite. However, momentum waned as profit-taking set in amid concerns over the peso’s depreciation to PHP59.00 against the dollar, its lowest since Oct 2022, stoking inflation fears and dampening sentiment. On the global front, geopolitical risks escalated with Russia launching missile strikes on Ukraine in retaliation for an earlier attack, further adding to market uncertainty.
PSE outlook this week
This week, we expect the local bourse to trade sideways with a slight downward bias due to the absence of fresh catalysts to shift sentiment. Trading activity is likely to pick up early in the week as the MSCI semi-annual rebalancing changes will be made available as of the close of 25 Nov 2024 (effective 26 Nov 2024), in which the Philippines experienced a slight country down-weight (-0.004%). Market participants will mainly look to the US economy for direction, particularly the FOMC minutes and the US Core PCE Price Index for Oct 2024, which may offer insights into the long-term trajectory of policy rates. Meanwhile, foreign trading activity could be subdued towards the end of the week due to the US Thanksgiving holiday on 28 Nov 2024.
Stock Picks this week
1. AREIT Inc. (AREIT)
| Recommendation | Sell |
| 1-Year Target Price | PHP 32.00 |
In line with the changes made to the MSCI Global Indices, we expect that AREIT will experience significant buying volume leading up to and during the rebalancing date on 25 Nov 2024 as both active and passive funds rebalance their portfolios in anticipation of the changes to the MSCI global indices. Thus, we see rebalancing activities as an opportunity to take profits on the counter as it encounters upward pressure.
Taking profits on AREIT today is advisable. Set stop limit orders 8% below and take profits 15% above your average cost.
2. Robinsons Retail Holdings, Inc. (RRHI)
| Recommendation | Buy on support |
| 1-Year Target Price | PHP 43.00 |
In line with the changes made to the MSCI Global Indices, we expect that RRHI will experience heavy selling pressure leading up to and during the rebalancing date today 25 Nov 2024 as both active and passive funds rebalance their portfolios in anticipation of the changes to the MSCI global indices. Hence, we see rebalancing activities as an opportunity to accumulate the counter.
Accumulating RRHI today near its support area is advisable. Set stop limit orders 8% below and take profits 15% above your average cost.
3. Century Pacific Holdings, Inc. (CNPF)
| Recommendation | Trailing stop |
| 1-Year Target Price | PHP 41.00 |
As the stock appears to face resistance near PHP42.00, close to our fundamental Target Price of PHP41.00. Momentum indicators, such as RSI and MACD, moving downwards indicate potential further downside.
At current levels, we recommend taking profits and setting trailing stops to safeguard gains. For those looking for an opportunity to accumulate, the 200-day MA at PHP36.50 presents a favourable re-entry point. For those with positions, implementing trailing stops is advisable.
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