Last week, the PSEi inched down by 0.40% w-o-w to close at 6,923.60 (-27.93pts) as investors took off risk ahead of the weekend amidst the fourth straight week of Peso’s depreciation against the US dollar and weakened market sentiment clouded by expectations of higher Sept-21 inflation print. Despite the market ending in red, counterbalancing positive factors were also observe within the week such as: 1) extended Alert level 4 in Metro Manila but with allowed expanded operations (e.g., 20% allowed indoor capacity and reopening of gyms and fitness studios), 2) foreign block sales on MREIT IPO, 3) six-month high Philippine Manufacturing PMI (purchasing managers’ index) data at 50.9 in Sept-21, from the 46.4 posted in Aug-21, and 4) the announcement of the scheduled start of the pilot vaccination of minors 12-17 years old on 15 Oct 2021.
This week, we expect the market to trade sideways with a downward bias as investors remain cautious ahead of expected higher Philippine inflation data on Tuesday (BSP forecast: 4.8%- 5.6%). On the other hand, the arrival of 1.81m doses of Pfizer COVID-19 vaccines and the easing of restrictions amidst Alert Level 4 in Metro Manila can limit the downside this week. On the foreign front, investors will be on the lookout for U.S.’ employment report on Friday, which could potentially be the decisive factor for the U.S. Federal Reserve in tapering its monthly US$120bn bond buying program.
Our picks for this week:
- Jollibee Foods Corp. (JFC) — BUY
- DMCI Holdings, Inc. (DMC) — BUY
- Shakey’s Pizza Asia Ventures, Inc. (PIZZA) — BUY