While the U.S. Federal Reserve’s rate hike at 75 basis points (bps) or 0.75% is at par with expectations, Jerome Powell\u2019s statements which affirmed the Fed\u2019s more hawkish stance coupled with the so-called dot chart showing that most Fed officials are now expecting interest rates to climb further to 4.5% next year with half of the officials projecting a terminal rate (peak rate before a rate cut) at 4.9% are beyond market expectations. Investors were initially expecting that the Fed may start trimming down interest rates in the latter part of 2023 after peaking at 4.5% and this is what was being priced in along with the widely expected 75-bp rate hike, hence the sharp drop that we saw in the US market last night (DJIA down by 1.70%; S&P 500 down by 1.71%).<\/p>\n\n\n\n
Our View:<\/strong> We expect similar sentiment, as hawkish Fed may lead to weaker Peso and further BSP rate hikes, to drive another leg down for the PSEi below our support level of 6300.<\/p>\n\n\n\n Chart-wise, support now stands at 6200 \/ 6000. Given this, we would advise investors to maintain liquidity in the meantime and position once the index approaches critical support of 6000 but for those who are less risk averse, range trading with a focus on banks and bottom fishing picks (excluding property names) as higher interest rates initially hit stocks with high valuations should be prudent.<\/p>\n\n\n\n For our bank picks we have the following pecking order based on technicals: BPI (Target Price: P111.00), BDO (Target Price: P159.00), SECB (Target Price: P140.00\/share), and MBT (Target Price: P62.00) \u2014 these are based on revised Target Prices, mostly downgraded due to lower justified P\/B multiple on higher risk-free rate.<\/p>\n\n\n\n For bottom fishing picks, once the index pulls back to immediate support level of 6,200, we would focus on CNVRG (Target Price: P35.00), GLO (Target Price: P3,040), MONDE (Target Price: P17.00), PGOLD (Target Price: P56.35), ICT (Target Price: P248.00), and GTCAP (Target Price: P640.00).<\/p>\n\n\n\n Investors may also consider DMC (Target Price: P12.50) outside the bottom fishers given upcoming catalyst of special dividends towards the end of September or first week of October. We note that the next key catalyst for the market would be the release of September inflation data (PH inflation on October 5; US inflation on October 13).<\/p>\n","protected":false},"excerpt":{"rendered":" Here’s a commentary on an important issue or event affecting the stock market <\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-317484","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=317484"}],"version-history":[{"count":3,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317484\/revisions"}],"predecessor-version":[{"id":320530,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317484\/revisions\/320530"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=317484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=317484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=317484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}