Stock Market Weekly: Upside may be capped

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) ended the shortened trading week nearly flat amid the lack of local catalysts, inching downward by 0.54% week-on-week (w/w) to close at 6,281.58 (-34.35 points). The market experienced minimal declines early in the week as investors remained cautious, awaiting Thursday’s US Federal Open Market Committee (FOMC) minutes for direction on policy rates.

As it happened, majority of Fed officials had voted to hold rates steady due to concerns on inflation and employment, providing little support for market sentiment. Locally, trading remained subdued toward the latter half of the week in anticipation of two holidays (Ninoy Aquino Day on August 21 and National Heroes Day on August 25) and Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday. Nonetheless, selective bargain hunting helped lift the index slightly as the week concluded.

WHAT THE EXPECT THIS WEEK

This week, we expect the market to trade sideways with an upward bias as investors digest key developments from the long weekend amid portfolio rebalancing activities. Market sentiment should improve following Powell’s remarks signaling a potential rate cut for the first time this year in September 2025, amid weak US employment figures.

Locally, this strengthens the case for the Bangko Sentral ng Pilipinas (BSP) to lower policy rates on Thursday, with consensus expecting a 25-basis-point cut to 5.00% on below-target inflation and steady GDP growth. However, the upside may be capped as the MSCI quarterly index rebalancing (effective August 27, 2025) will likely drive heightened volatility early in the week, wherein Philippine National Bank (PNB) and RL Commercial REIT, Inc. (RCR) will replace D&L Industries, Inc. (DNL) in the MSCI Philippines Small Cap Index.

In addition, the telco sector faces additional uncertainty after the Konektadong Pinoy Act lapsed into law on Sunday, creating headwinds for incumbents while favoring newer entrants.

ANALYSIS

Support: 6,200

Resistance: 6,300/6,400

The PSEi slipped 0.54% w/w to 6,281.58 (-34.40 points), trading rangebound within a descending triangle pattern. While the index has managed to hold above the 6,200-support level, it has been struggling to find momentum. Furthermore, the main index remained below all key moving averages, indicating a cautious technical backdrop. Unless the index breaks above the triangle resistance with conviction, the broader trend is likely to remain sideways to bearish, with risk of breakdown if 6,200 support fails.

Trading Plan: Accumulating select value stocks at current levels remains reasonable, though a breakout above 6,350–6,400 with firm volume would provide stronger confirmation before adding exposure. Conversely, a breakdown below 6,200 may call for tighter risk management or a more defensive stance.

STOCK CALLS FOR THE WEEK

SM Prime Holdings, Inc. (SMPH) – BUY | FMSEC Target Price: PHP 32.00

SMPH appears to be consolidating near its 50-day and 100-day moving averages (MA), now serving as its support zone. In terms of momentum indicators, the RSI is at neutral territory, and the MACD line is below the signal line, both presenting a good opportunity to enter. Once the stock rebounds from its key support levels, it will potentially trend upwards to fill the gap in price. Accumulating SMPH around PHP 23.00 is advisable. Take profits at PHP 26.45 and cut loss at PHP 21.16.

Ayala Land, Inc. (ALI) – BUY | FMSEC Target Price: PHP 35.00

ALI has broken out of its downtrend channel and is now trading above all key moving averages (20-day, 50-day, 100-day, and 200-day), signaling renewed interest in the stock. The MACD will likely cross above the signal line, while the RSI is approaching overbought levels, reinforcing the bullish momentum. Accumulating ALI at current levels is advisable (~PHP 27.00). Take profits at PHP 31.05 and set the stop loss limit below PHP 24.84.

Robinsons Land Corp. (RLC) – BUY ON PULLBACKS | FMSEC Target Price: PHP16.00

RLC appears to be in an uptrend, trading above its 20-day, 50-day, 100-day, and 200-day moving averages (MA). As the stock has already recovered from its short decline, another retracement toward the immediate support could offer a better opportunity for accumulation. Accumulating once RLC pulls back near PHP 14.70 is advised. Take profits at PHP 16.90 and set stop loss limits below PHP 13.52.

KEY DATA RELEASES

1. Philippines’ Interest Rate Decision on Thursday, August 28, 2025 (previous: 5.25%; estimates: 5.00%)

2. Philippines’ Budget Balance for July 2025 on Thursday, August 28, 2025 (previous: -PHP 241.6 billion)

3. US GDP growth rate quarter-on-quarter (q/q) for 2Q 2025 (2nd est.) on Thursday, August 28, 2025 (previous: -0.5%; estimates: 3.0%)

4. Philippines’ Balance of Trade for July 2025 on Friday, August 29, 2025 (previous: -USD3.95 billion)

5. Philippines’ Imports and Exports y/y for July 2025 on Friday, August 29, 2025

6. Philippines’ Producers’ Price Index (PPI) y/y for July 2025 on Friday, August 29, 2025 (previous: -0.45%)

7. US PCE Price Index y/y for July 2025 on Friday, August 29, 2025 (previous: 2.6%; estimates: 2.6%)

(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.)