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Pandemic, US-China tension to weigh on stock market

By James A. Loyola

The local stock market is seen to trade lower this week as investors shy away because of uncertainties over the economic impact of the pandemic as well as the growing tension between the US and China.

“Next week’s trading is still expected to have a downward bias as the market, already weighed by the pandemic and its adverse economic impact, faces a brewing geopolitical tension offshore,” said Philstocks Financial Senior Analyst Japhet Tantiangco.

He noted that, “With no solution yet against COVID-19, investors will still deal with the health to economy trade-off dilemma. The easing of quarantine measures allows resumption of some economic activities but at the risk of a further virus spread.”

AAA Equities Head of Research Chris Mangun said that, “The PSEi has resiliently stayed above the 5,350 support level since it broke above it back in April. But after several weeks, most of its upside momentum is gone and investors may take more cash off the table as the current environment remains unstable.”

“Global equities markets may trade lower (this) week as geopolitical tensions pick up which can also dampen the local sentiment. However, our market has been known to do the opposite of global markets, and with only four trading days because of the Eid’l Fitr (Feast of Ramadhan) holiday on Monday, we could see more trading on the remaining days,” he added.

Acording to 2Tradeasia, “investors positioning at the market’s present state must be prepared to take on a pro-active view on global economies’ healing and recovery. Strategize portfolio allocation and trade a range.”

COL Financial is recommending Filinvest Land, Inc. to investors because it “has the highest exposure to office leasing which we estimate accounts for 40 percent of its operating income.”

“This benefits the company during the ECQ as FLI continues to recognize revenues office tenants, unlike retail tenants whose rents are waived during ECQ,” it explained.

COL also has a BUY rating on GT Capital as its current market price is way below its historical average. Current discount to net asset value is also at its highest historically at 48 percent.

“While the negative sentiment would most likely keep prices depressed in the short term, we believe that these challenges are transitory and that fundamentals remain attractive over the long term,” Col said.

The stock brokerage also favors Eagle Cement Corporation because: “We continue to like EAGLE given its ongoing capacity expansions and superior margins.”

Abacus Securities Corporation is recommending First Gen Corporation as it is the cheapest among the country’s top power producers.

“It is also cheaper than its historical valuations… This may imply that potential downside is already limited. Furthermore, it is only trading at half its book value… We believe its present valuations make the stock a low-risk BUY,” it explained.


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/25/pandemic-us-china-tension-to-weigh-on-stock-market/)

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