Outlook. We expect the PSEi to hover around 7,200-7,400 amid lack of leads and ahead of the earnings season which will start next week with the release of Q2 earnings of IMI on July 27 and BDO & MER on July 30.
Market Review. The PSEi traded sideways (+12.2 points, +0.2% day-on-day) today to 7,381.7. Last week, the local bellwether tracked Asian markets, rising by 212 points (+3% week-on-week, w/w) to 7,399.2 on easing trade tensions after US & China signaled they are open to resume trade negotiations. Year-to-date (YTD), the index fell 13.7% and by 18.5% from Jan. 29’s peak of 9,058.
- YTD, Asian markets were mostly in the red led by China (-14.9%), the Philippines (-13.9%) and Thailand (-7.2%). India (+6.7%) and Taiwan (+1.6%) were the only gainers (as of July 16).
- Local market is now on its 6th month of correction, sustaining 24 straight weeks of net foreign outflows totaling P73.5bn. YTD net selling amounted to P69bn, wiping out the P55bn net foreign inflows in 2017.
- PHP closed yesterday at P53.53/$, -6.7% YTD. It was the second weakest currency in the region, next only to the Indian rupee (-6.9%)
- Last week, BPI, SM, TEL, SMPH and MER were the most bought stocks by foreign investors for an aggregate amount of P843mn, while MBT, MPI, ALI, JFC and AGI were the most sold stocks totaling P2bn. YTD, foreign investors mostly flocked to MER and TEL for P3.4bn, while investors unloaded SM, ALI, BDO, AC and JGS for a whopping P32.6bn.
Bangko Sentral ng Pilipinas (BSP) reported that cash remittances rose 6.9% y/y to $2.5bn in May, driven by strong inflows from Filipinos in the US (contributed 2.6 percentage points), United Kingdom (1.6 percentage points) and Singapore (1.3 percentage points). These countries comprised 45% of total remittances in May. Notably, cash remittances from the Middle East sustained its decline, -16.3% y/y in May. In peso terms, May cash remittances rose at a faster pace of 12% y/y to P129bn. YTD, cash remittances tallied to $11.8bn, +4.2%. Likewise, personal remittances grew 6.1% y/y to $2.7bn. YTD, it expanded by 4.4% y/y to $13.2bn. We (house view) expect OFW remittances to sustain 2-4% growth for full year 2018.
Philippine Economic Zone Authority (PEZA) reported that investment pledges in H1 2018 fell by 55.9% y/y to P53.1bn. Notably, investments in ecozone development dropped 65.1% y/y to P26.3bn, manufacturing by 9.3% to PP19.5bn and IT-business processing by 13.7% y/y to P8.1bn. PEZA attributed the decline to uncertainties on the proposal to remove fiscal incentives under TRAIN 2.
Megaworld Corporation (MEG) has opened three new community malls, namely San Lorenzo Place and Three Central in Makati and The Village Square in Alabang with a combined retail space of 26,500 sqm. This has increased MEG’s full-scale and community malls to 17. The company aims to operate 18 malls by end-2018 and 28 malls by end-2020 to support its goal to generate recurring income of P20bn and total rental space of 2.5mn sqm. MEG closed today at P4.49/share, -13% YTD.
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