Weekly Equities Summary and Outlook : March 26 – 28, 2018
Market Outlook. We expect the market to trade sideways to lower should the March inflation reading on Thursday proved upward to the consensus estimate of 4.7%, higher than 4.5% in February and the central bank’s estimate of 3.8% to 4.6%.
Market Review. The market traded flat, up by +0.1% to 7,979, following most regional markets (see table of Asian Indices) as investors watched developments on trade war and the US technology sector. After trading within the 7,900 range last Monday, the market slightly rose to 8,047.03, up 1.4% day-on-day last Tuesday, on news that the United States and China are communicating for a softer tone on trade. Quarter-end window dressing also supported the market but was short-lived as the sell-off in the US technology sector (Facebook shares fell 5% in a day upon Mark Zuckerberg’s decision to testify before Congress) spilled over to Asian markets. The index closed weaker in March, down -5.8%, the second worst performer following Indonesia’s -6.2% decline. Year-to-date (YTD), the PSEi was also the second worst performer, down -6.8% next to Japan’s -7.1%. YTD, the top performer was Malaysia at +3.3%. Foreigners continued to sell Philippine stocks last week with total net foreign selling at Php2.5bn. The most sold stocks were BDO, ALI, SM, ICT and SMPH for a total amount of Php1.43bn while the most bought names were AGI, GLO, JFC, SMC and MPI amounting to Php376mn. Ytd, foreigners bought TEL, JFC, PGOLD, MER and MEG (Php3.93bn) while SM, ALI, AC, BDO and SMPH were the most sold stocks (-Php21.4bn).
Bank lending (net of reverse repurchase) expanded by +19.5% in February year-on-year (y-o-y), faster than the +19.0% growth recorded in January (revised). Month-on-month (m-o-m), commercial bank loans (net) increased by +1.8%. Drivers of loan expansion were:
GT Capital (GTCAP) FY2017 core net income rose 29% to Php15.0bn from Pp11.7bn in 2016 as consolidated revenues increased 19% to Php239.8bn from Php202.1bn. Chunk of the group’s net income were from the following: Toyota Motor Philippines (+11%, net income) contributed 39.1% to total net income, Metrobank (+10%, core net income) at 34.4% of total, and Metro Pacific Investments (+17%, core net income) at 9.6%. AXA, contributing 3.6%, grew 21% in core net income while the two property companies’ aggregate net income were slightly lower to Php2.1bn from Php3bn in 2016.
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