Weekly Equities Summary and Outlook : February 05 – 09, 2018

First Metro Weekly Equities and Economic Outlook - February 05 - 09, 2018

Outlook. We expect the market to stay volatile with PSEi likely to trade within the range of 8,300-8,700 amid lingering concerns about the outlook for interest rates, after BSP raised its inflation outlook for 2018 to 4.3% from 3.4% and Pres. Trump’s spending bill to raise US federal deficit to more than $1trn in the coming years from 2017’s $666bn (3.5% of GDP).

Drivers. Key economic data to watch out for are the release of US inflation and retail sales figures for Jan. on Feb. 14 (US time). On the local front, BSP will release the OFW remittances for Dec. on Feb. 15. ALI will report the 4Q17 earnings results on Feb. 14.

Market Review. PSEi was down 16 points (-0.2%) today from Friday’s closing to 8,487.9. Last week, PSEi shed 307.1 points (-3.5% w-o-w) to 8,503.7, as global market rout continued for the second week over inflation fears that could force the Fed and other major central banks to tighten monetary policy more aggressively than anticipated. The market’s retreat saw the value of global stocks dipped by $5.2 trillion, according to S&P Global BMI. PSEi was down 6.3% today from its all-time high of 9,058 on Jan. 29 and erased its ytd gains for 2018.

• W-o-w, major markets in Asia were down -- China (-9.6%), Hong Kong (-9.5%) and Japan (-8.1%). YTD, resilient markets were Indonesia (+2.4%), Thailand (+1.9%), and Malaysia (+1.3%).
• Net foreign outflows last week totalled P4.7bn. YTD, net foreign selling was also P4.7bn. Daily foreign selling eased in the last three trading sessions to P137mn on Friday from a peak this year of P2.3bn on Jan. 31.
• Foreign investors unloaded pricey stocks , i.e. SM, SMPH, BDO, ALI and BPI for a combined amount of P3.5bn. Most bought stocks were cheap ones (except for JFC) -- TEL, JFC, MEG, RLC and AGI for a total of P439mn.

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