Stock Market Weekly: Bearishness may persist 

WHAT HAPPENED LAST WEEK

Last week, the Philippine Stock Exchange index (PSEi) declined by 1.52% week-on-week (WoW) to close at 6,063.33 points (-93.66). Investors remained cautious throughout the week amid inflation fears after US President Donald Trump announced plans for “reciprocal tariffs” on US trade partners and a 25% tariff on all aluminum and steel imports.

Bearish sentiment was exacerbated by higher-than-expected US Consumer Price Index (CPI) and Producers’ Price Index (PPI) prints at 3.0% (consensus: 2.9%) and 3.5% (consensus: 3.4%), respectively. On the local front, the market digested the results of the MSCI Quarterly Index Review for February 2025, wherein the Philippines endured a country downweight (-0.013%).

For MSCI Philippines Standard Index, JG Summit Holdings, Inc. (JGS) and Universal Robina Corp. (URC) were demoted to the MSCI Phils Small Cap Index, wherein Monde Nissin Corp (MONDE) was also added. All changes will be implemented as of the close of February 28, 2025 (effective March 3, 2025).

On the other hand, bulls attempted to gain momentum mid-week in anticipation of a 25-basis-point (bp) rate cut by the Bangko Sentral ng Pilipinas (BSP), bringing the local policy rate to 5.50%. However, in a widely unexpected move, BSP kept rates unchanged and adjusted its inflation forecast for 2025 to 3.5% from 3.4%.

WHAT TO EXPECT THIS WEEK

This week, we expect the bearish mood to persist as investors await developments on US President Donald Trump’s foreign policies. The market will primarily take cues from the US economy, several US Fed speeches, and the Federal Open Market Committee (FOMC) minutes.

On the local front, investors will also track the full year 2024 earnings releases of index heavyweights Ayala Land Inc. (ALI) and Metropolitan Bank and Trust Co. (MBT). Meanwhile, the appreciation of the peso back to the PHP 57.0 level could offer some support and stimulate foreign buying.

Resistance: 6,400 / 6,200

Support: 6,000 / 5,800

ANALYSIS

The PSEi declined 1.52% WoW to close at 6,063.33 (-93.66 points). The index remains below key moving averages (20-day, 50-day, 100-day, and 200-day), reflecting sustained bearish sentiment. Momentum indicators show a mixed picture, with RSI bouncing from oversold levels, while MACD continues to hover around bearish territory with minimal signs of reversal.

The immediate support is at 6,000, while the nearest resistance is at 6,200 and the next at 6,400. However, the current risk-reward is skewed to the upside. Thus, we suggest accumulating at current levels.

STOCK CALLS FOR THE WEEK

Monde Nissin Corp. (MONDE) – BUY | FMSEC TARGET PRICE: PHP 12.00

MONDE’s stock price has rebounded from its 54-week low of PHP 6.63 and is currently exhibiting an upward trend. The counter is now trading above its 20-day and 50-day moving averages (MA) and seems poised to test the PHP 8.45 resistance level. Momentum indicators suggest a bullish outlook, with the MACD line crossing above the signal line and gradually approaching positive territory.

Additionally, the RSI is trending upward while remaining in neutral territory, indicating strengthening bullish momentum. Accumulate MONDE at current levels and sell on February 28, 2025, to capitalize on near-term swings. Take profits 15% above your average cost and set stop-loss limits 8% below your average cost.

Robinsons Retail Holdings, Inc. (RRHI) – BUY ON BREAKOUT | FMSEC TARGET PRICE: PHP 47.00

RRHI’s stock price recently bounced from its support level at PHP 34.00 and surpassed its short-term resistance at PHP 35.07. The counter is currently trading above its 20-day and 50-day moving averages (MA) but remains below its 100-day and 200-day MAs. Momentum indicators, such as the RSI and MACD, suggest a gradual shift toward an upward trend.

If this pattern continues, it could indicate strong bullish momentum. A breakout above the 200-day MA around PHP 36.91, supported by increased volume, could confirm a sustained uptrend. Accumulate RRHI once it breaks above its 200-day MA around PHP 36.91 with strong volume. Take profits at PHP 42.00 and set stop-loss limits below PHP 33.00.

Ayala Land, Inc. (ALI) – BUY | FMSEC TARGET PRICE: PHP 35.80

ALI is in a short-term consolidation, establishing support around the PHP 24.50 level. It is currently below all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day), indicating a weak trend. On momentum indicators, the MACD is above the signal line, while the RSI is nearing oversold levels, signaling a potential rebound.

Accumulating ALI at current levels around PHP 24.50 is advisable. Take profits around PHP 28.18 and set a stop-loss limit around PHP 22.54. For long-term investors, we have a fundamental target price of PHP 35.80 (+46.12% upside from recent close).

KEY DATA RELEASES

1. US FOMC Minutes – Thursday, February 20, 2025

2. US Initial Jobless Claims (as of February 15, 2025) – Thursday, February 20, 2025 (estimates: 219k; previous: 216k)