FREE Special Report: BSP interest rate policy meeting’s impact on PSE stocks (June 2017)

In Focus: BSP Meeting on Thursday

The PSEi failed to remain above the 8,000 level last week and succumbed to profit-taking after the US Fed increased its policy rates by 25 basis points (0.25%) last week.

With the PSEi closing below its key support of 7,900 last week, we expect the market to trade sideways as investors look for clues during the BSP’s Monetary Board policy meeting this Thursday. As we said in our previous note last June 15, we expect the BSP to hike its policy rates (by 25 to 50 bps) to bring down inflation rate as it is now trending above the 3% level since February, and to protect the stability of the peso.

Our recommendation is to trade selectively and accumulate stocks on dips near the 7,800 level.

Among power companies that remain the laggards of the PSEi due to an oversupply in energy reserves until 2020, we recommend EDC (BUY, Target Price: PHP 7.05) as it is not directly exposed to the weakness of the spot market as compared to its peers.

Among banks, we still see meaningful upside for MBT (BUY, Target Price: PHP 100.00) and EW (BUY, Target Price: PHP 33.00).

In the consumer sector, we like relatively undervalued companies such as:

PGOLD (BUY, Target Price: PHP 49.40)

MAXS (BUY, Target Price: PHP 27.40)

PIZZA (BUY, Target Price: PHP 14.75)

MRSGI (BUY, Target Price: PHP 4.35)

EMP (BUY, Target Price: PHP 8.30)

For WLCON, however, we recommend to take profits as it is almost trading near our Price Target of PHP 7.00.

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