The Philippine stock market registered net foreign inflows for the 2nd month in a row, following positive flows reversal which started in July. As it stands, after 12 straight sessions of net foreign buying, the balance shows net inflows of US$121 million. This trimmed further the total net outflows year-to-date to US$346.5 million (down from US$530 million as of end-June). In addition, volumes have also picked up alongside the hike in foreign buying.<\/p>\n\n\n\n
The inflows reflect improving foreign investor sentiment in the Philippines which was prompted by improving macro — a higher-than-expected 2Q 2024 GDP growth (+6.3%) followed by an earlier rate cut (0.25%) by the BSP. Recall that we\u2019ve been saying earlier that investors have been reacting more to macro than earnings as shown in the case of Indonesia.<\/p>\n\n\n\n
The positive flows are also in line with the feedback we got from several Singapore-
based investors that the level of interest on the Philippines is starting to pick up in reaction to improving macro, strong peso and relatively benign politics.<\/p>\n\n\n\n
Note that we recently upgraded our index target to 7,500 from 7,300 and earnings forecast to 12% from 10.3%, in reaction to positive earnings growth momentum and stronger GDP growth. We also expect additional upgrades as the rate cut should
prompt analysts to adjust their risk-free rate assumptions resulting in upgrades in target prices.<\/p>\n\n\n\n
Our top picks include SM, MBT, JFC, ALI, ICT, AP & MWC. In terms of sectors, we recommend to overweight on Banks, Property and Consumer sectors.<\/strong><\/p>\n\n\n\n