Last week, the local index advanced by 1.67% week-on-week (w\/w) to close at 6,961.96 points, marking its third straight weekly gain and reclaiming the 6,900 level for the first time in over four months. The rally was fuelled by positive sentiment, driven by expectations of continued monetary easing in both the Philippines and the United States. Investors also responded favourably to the country\u2019s balance of payments (BOP) reversal to a surplus position of USD62.0 million in Jul 2024 (Jun 2024: -USD155.0mn, Jul 2023: -USD53.0mn). <\/p>\n\n\n\n
On the currency front, the Philippine peso (PHP) strengthened by +1.03% w\/w to P56.448, reaching its strongest level in five months as the US dollar (USD) weakened against most currencies. With the absence of fresh domestic catalysts, the PSEi largely mirrored Wall Street’s trajectory as market participants awaited the US Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, on 22 Aug 2024, where Chair Jerome H. Powell outlined the Fed\u2019s rate cut strategy.<\/p>\n\n\n\n
Looking ahead, we anticipate the PSEi to extend its upward momentum, underpinned by dovish language from Fed Chair Powell during the Jackson Hole Symposium last week. Powell’s remarks that \u201cthe time has come\u201d to cut interest rates, citing rising risks to the labour market and reduced inflationary pressures, provided a clear confirmation of imminent policy easing in the US. <\/p>\n\n\n\n
The market now views a September rate cut as nearly certain, with a one-third probability of a 50 bps (0.50%) reduction. However, gains may be capped as the local bourse contends with the 7,000 resistance level and the ongoing geopolitical tensions in the Middle East, particularly between Israel and Lebanon, which could weigh on investor confidence. <\/p>\n\n\n\n
Meanwhile, consumers can expect some relief as oil companies are set to slash pump prices this week, with gasoline prices expected to fall by PHP1.15 per litre, diesel by PHP1.90 per litre, and kerosene by PHP1.85 per litre. Expect higher trading volumes towards the latter part of the week as the effectivity of the recent MSCI Quarterly Index Review comes as of the close of Fri, 30 Aug 2024.<\/p>\n\n\n\n
Recommendation<\/strong><\/td>| Trailing Stop<\/td><\/tr> | 1-Year Target Price<\/strong><\/td> | PHP 35.80<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n | <\/div>\n\n\n\n The stock has risen by as much as 18%, reaching a peak price at around PHP34.30, in line with our fundamental target price of PHP34.20. In terms of price action, the stock is trading significantly above all its key moving averages (20-day, 50-day, 100-day, and 200-day) with strong volume.<\/p>\n\n\n\n For those who purchased the stock at our recommended entry point of PHP29.00, it is advisable to start implementing trailing stops to protect profits and manage risk. For those with positions, we recommend implementing trailing stops to protect profits and manage risk.<\/p>\n\n\n\n <\/div>\n\n\n\n 2. DigiPlus Interactive Corp. (PLUS)<\/h3>\n\n\n\n
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