The PSEi concluded a volatile trading week in negative territory, declining by 2.3% w\/w to 6,977.18 (-165.78 pts). Early in the week, market sentiment was buoyed by Oct 2024 inflation data, which came in at 2.3%, aligning with consensus expectations and remaining within the Bangko Sentral ng Pilipinas\u2019 (BSP) target range of 2-4%. Additionally, Sep 2024 unemployment declined to 3.7% from Aug 2024’s 4.0%, outperforming the estimated 4.4%. <\/p>\n\n\n\n
However, bearish sentiment prevailed following a series of risk events: (i) a likely Republican sweep in the US elections, leading to market concerns over potential tariffs and protectionist trade policies; and (ii) the Philippines\u2019 3Q24 GDP growth missing expectations at 5.2%, below the consensus forecast of 5.7% and the government\u2019s target range of 6-7%. Meanwhile, the reaction to the MSCI quarterly rebalancing was largely muted, with no significant changes to the index composition. Persistent risk-off sentiment pushed the main gauge back below the 7,000 level by the end of the week, although the US Federal Reserve\u2019s anticipated 25-bp rate cut helped limit further losses<\/p>\n\n\n\n
This week, we expect the local bourse to trade sideways with a downward tilt on the lack of significant catalysts to reverse bearish sentiment. Overall market performance is likely to closely track the earnings results of several index heavyweights. However, rising US Treasury bond yields and a strengthened US dollar following the Republican victory may continue to weigh on local sentiment \u2013 especially as some think tanks expect the Peso\u2019s continued depreciation to put the BSP\u2019s easing cycle on hold. Nonetheless, downside may be capped as investors continue to digest local economic data, with lower unemployment and recovering household consumption signalling broader economic recovery. Moreover, barring a trade war between the US and China, economists expect that Asian markets may stand to gain market share on exports as Trump\u2019s promised tariffs on China trigger reorganisations in global supply chains.<\/p>\n\n\n\n
Recommendation<\/strong><\/td>| Buy<\/td><\/tr> | 1-Year Target Price<\/strong><\/td> | PHP 20.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n | <\/div>\n\n\n\n CNVRG has crossed below its 20-day and 50-day moving averages (MA) after nearly two months of trading within a range, largely on a lack of catalysts to drive the stock further upward. Nonetheless, although momentum indicators suggest a lack of significant movement, the stock remains above its 100-day and 200- day MAs. As such, long-term bullish momentum has yet to peak. <\/p>\n\n\n\n We view recent price weakness as an op- portunity to accumulate the stock, with our fundamental target price of PHP20.50 implying >30% upside. Accumulating at current levels is advised. Take profits 15% above average \u2013 ahead of our and consensus expectations \u2013cost and set stop-loss limits 8% below as growth in mobile (+9% y\/y) and corporate (+14% y\/y) average cost. For long-term investors, we have a <\/div>\n\n\n\n 2. Manila Electric Company (MER)<\/h3>\n\n\n\n
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