Oil prices and inflation will weigh on local stocks – Manila Bulletin

Sentiment in the local stock market could be weighed down this week by another round of substantial fuel price hikes and investors will also be watching the government’s inflation rate report last month.

“Next week, the local market appears to have a downward bias given rising global oil prices and further depreciation of the Philippine peso, both of which pose inflationary risks to our economy,” Philstocks Financial said. Senior Supervisor for Research Japhet Tantiangco. .

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He added that “investors can also focus on our May consumer price index data. A print of inflation significantly faster than April’s 4.9% should boost inflation expectations, which could weigh on the local stock market.

“The May inflation report should be the focus of participants’ concerns. Particular focus will be on supply-side drivers to differentiate from the election-related impact which will abnormally inflate the figure,” 2TradeAsia.com said.

He noted that “This will be crucial for the BSP’s potential move at its MB meeting on the 23rd, although the BSP chief has already expressed the possibility of another 25 basis point rate hike this month. “

The brokerage added that “any whiff of entrenched inflation will make monetary policy unpredictable (and thus disrupt stock and bond markets).”

“An important metric that we have put under our radar is consumer spending power and confidence; the real impact of high inflation for more than six months, higher PhilHealth premiums/new excise taxes and higher mortgage/financing costs will dictate industry choices in the medium term,” 2TradeAsia said. com.

Besides the consumer price index, Tantiangco said that “investors can also monitor our foreign trade, foreign investment and labor market data to be released next week for clues on the state of the economy.” ‘local economy’.

Offshore concerns, including monetary tightening in the United States and the Russian-Ukrainian war, could continue to weigh on sentiment.

For stock picking, Abacus Securities has its eye on The Keeper Holdings as its sales in 2021 were already higher than in 2019 and net profit rose by a third in the first quarter.

“Meanwhile, KEEPR is still preparing to roll out the product of its recent FOO. An agreement should be reached by the end of the year which will strengthen the offer and improve the cost structure of brandy in the future”, he added, noting that “the company benefits and will continue to benefit premiumization in the liquor industry.

For its part, COL Financial has a buy rating for Keepers’ Cosco Capital paret which it says “remains severely undervalued as the market fails to value its other businesses (apart from PGOLD) such as distribution alcohol and real estate”.

It also has a buy rating for Puregold “as it remains well positioned to seize growth opportunities in the retail sector for its differentiated focus on middle to low income consumers as well as the reseller niche market” .

COL also has a Buy rating for Vista Land because “VLL’s better-than-expected earnings give us reason to be bullish on VLL. Despite property revenues lagging its peers, VLL is compensating with cost-cutting initiatives. »

He noted that “the steady growth in reservation sales is also a source of positivity, as this should support future revenues. Finally, through its community malls, VLL is benefiting from a recovery in consumer consumption as quarantine restrictions are no longer in place.

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Felix J. Dixon