Stock Market Weekly: Iffy negotiations

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) ended the week lower by 45.79 points to close at 5,972.83, or -0.76% week-on-week (w/w), as macroeconomic and currency-related concerns weighed on sentiment. While risk appetite briefly improved following US President Donald Trump’s decision to postpone military action against Iran, and local government measures to secure energy supply, these positives failed to sustain market momentum.

Investor sentiment turned cautious after Iran rejected the US ceasefire proposal, reviving geopolitical uncertainty. This was compounded by downward revisions to the Philippines’ 2026 growth outlook by major research houses and continued peso weakness, which slid to a historic low of PHP 60.55, ultimately capping gains and pulling the index lower.

WHAT TO EXPECT THIS WEEK

This week, we expect the local bourse to trade range-bound with a slight downward bias as uncertainty persists over the direction and viability of US-Iran negotiations. Over the weekend, Iran-aligned Houthis militants in Yemen joined the conflict by launching attacks against Israel, raising the risk of further regional escalation.

Should the Houthis expand their offensive, a potential target is the Bab el-Mandeb Strait, a critical chokepoint that carries roughly 10% of global oil supply and serves as the southern gateway to the Suez Canal.

On the domestic front, investors will continue to digest the Bangko Sentral ng Pilipinas’ (BSP) off-cycle decision to keep policy rates unchanged at 4.5%, amid heightened oil and commodity risks. Ongoing geopolitical tensions, combined with the peso’s depreciation to record lows, may sustain inflation pressures and weigh on consumer spending.

Resistance: 6,000/6,100

Support: 5,900/5,850

ANALYSIS

The index declined by -0.76% w/w to 5,972.83 (-45.8 points), and remains below its key moving averages (20-day, 50-day, 100-day, and 200-day), indicating continued bearish momentum. However, the index is showing early signs of recovery, with the MACD approaching the signal line and the RSI rebounding after nearing oversold territory. While these signals suggest that selling pressure may be easing, waiting for clearer signs of bullish momentum may be considered.

STOCK CALLS FOR THE WEEK

PLDT Inc. (TEL) | BUY ON BREAKOUT | FMSEC TARGET PRICE: PHP 1,540.00

TEL reported steady operating performance, with mobile revenues rising 4% quarter-on-quarter (q/q), supported by a 3% q/q increase in average revenue per unit (ARPU) following successful targeted upselling initiatives across its subscriber base. The fixed-line segment also continues to improve, with fiber now accounting for 98% of segment revenues, up from 92% last year, reflecting the company’s proactive migration of customers from copper to fiber.

Accumulate TEL once it breaks above its 50-day MA at PHP 1,356.90 to confirm bullish momentum. Take profits at PHP 1,492.50 and set stop loss limits below PHP 1,289.00.

Manila Electric Company (MER) | BUY ON PULLBACKS | FMSEC TARGET PRICE: PHP 650.00

MER’s power generation segment posted record core income of PHP 16.8 billion (+52% y/ y), lifting its share of consolidated earnings to 33% (full year 2024: 25%), supported by higher plant availability, full-year LNG Philippines contributions, and reserve market participation.

Meanwhile, Distribution Utility (DU) volumes slipped 0.6% y/y to 53,997 gigawatt-hours (GWh) amid weaker demand from POGO exits and cooler weather, keeping earnings growth modest at +6.3% y/y. Retail Electricity Supply (RES) volumes grew 11% y/y to 7,510 GWh on sustained customer additions, but core earnings fell 33.1% y/y to PHP 4.2 billion due to margin pressure from stiffer competition, lower spreads, and a higher mix of large contestable customers.

Accumulate MER once it retraces to its 100-day MA at PHP 593.00. Take profits at PHP 652.30 and set stop loss limits below PHP 563.30.

International Container Terminal Services, Inc. (ICT) | BUY ON SUPPORT | FMSEC TARGET PRICE: PHP 750.00

We believe the recent market reaction to escalating tensions between the United States and Iran is driving near-term volatility rather than signaling structural risk for ICT. While ICT could face indirect pressure from potential global trade disruptions, we do not expect a material long-term impact given its diversified international portfolio and resilient cash flow profile.

We see the current pullback as a strong buying opportunity for ICT. The stock remains the primary beneficiary of foreign inflows, thanks to its dominant weighting in both the Philippine Stock Exchange Index (PSEi) and MSCI Investable Market Index (MSCI IMI).

Accumulating on support at the 20-day MA around PHP 680.00 is advisable. Take profits at around PHP 748.00 and set a stop loss at around PHP 646.00.

(First Metro Securities Disclaimer: We obtain our information from sources we believe are accurate and reliable, but we cannot guarantee its completeness or accuracy. Our content consists of opinions, not investment recommendations, and you should perform your own research before making any investment decisions. First Metro Securities is not liable for any losses or damages resulting from the use of this information.)

(Metrobank Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)