Stock Market Weekly: Continuing rebound 

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) ended the week flat, lower by 0.07% w/w to close at 6,294.11 (-4.18 points). Early in the week, the local bourse declined amid escalating trade tensions sparked by US President Donald Trump’s tariff policies, triggering a Wall Street sell-off and fueling US recession fears. In addition, news of former President Rodrigo Duterte’s arrest on crimes against humanity allegations, followed by his departure to The Hague for trial before the International Criminal Court (ICC), also weighed on market sentiment. Later in the week, the PSEi recovered as political instability risks eased, with investors engaging in bargain-hunting after Governor Remolona hinted at a possible April rate cut amid the BSP’s ongoing easing cycle.

WHAT TO EXPECT THIS WEEK

This week, we expect the market to continue its rebound from last week’s selloff. While we do not discount the probability a prolonged period of heightened political instability risk, reactions from former President Duterte’s supporters have so far been peaceful. Thus, investors could look toward corporate earnings releases for positive narratives. In addition, we also note that risk-free rates have come off, and the Philippine peso remains stable with a slight appreciation bias. Finally, the lower-than-expected US inflation data released last week provides the Federal Reserve with the flexibility to signal further reductions in policy rates in 2025.

Resistance: 6,400 / 6,600

Support: 6,000 / 6,200

ANALYSIS

The PSEi slipped to 6,294.11 (-0.07% w/w), shedding a modest 4.18 pts. but holding above the 20-day and 50-day moving averages. With the momentum leaning upward, accumulating at current levels on sustained strength is advisable. Key support stands at 6,200, while a breakout above 6,400 could signal further upside.

STOCK CALLS FOR THE WEEK

RL Commercial REIT, Inc. | BUY ON PULLBACKS | CONSENSUS TARGET PRICE: PHP 7.01

The stock formed a rounding bottom pattern from October 2024 to March 2025, a bullish reversal signal. It recently broke above its previous high of around PHP 6.30, driven by interest from its inclusion in the FTSE Global All Cap Index. This surge in demand has pushed the stock into overbought conditions. While the momentum remains strong, be mindful of potential profit-taking after the inclusion date (21 Mar 2025). For those looking to enter, we recommend waiting for a pullback before effectivity to secure a better risk-reward entry. Accumulating RCR on pullbacks near key support levels (around PHP6.10/PHP6.00) is advisable. Take profits at PHP7.02 and set stop loss limits at PHP5.61.

International Container Terminal Services, Inc. | TRAILING STOPS | CONSENSUS TARGET PRICE: PHP 439.84

The counter has been trading in a downward channel since reaching its all-time high of PHP 446.00 in Oct 2024. Since then, it has struggled to sustain momentum, forming lower lows amid geopolitical uncertainties. While the stock surged by as much as 50% in 2024 from end-2023 to its peak, replicating that rally may be challenging given the ongoing downtrend and macroeconomic headwinds. Given these, investors may consider reducing exposure ahead of potential volatility. We recommend implementing trailing stops and taking profits near the upper band of the downward channel. For those with exposure, implementing trailing stops is advisable.

Manila Electric Company | BUY ON PULLBACKS | CONSENSUS TARGET PRICE: PHP 505.00

MER exhibits bullish momentum after reaching a new all-time high of PHP520.00 and remains above all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day MA). On momentum indicators, MACD is positioned above the signal line indicating strengthening of the stock. However, with the RSI approaching the overbought levels, and the stock easing after breaking above its PHP500.00 resistance, MER might be due for a pullback. Accumulating MER once it pulls back around PHP480.00 level is advisable. Take profits 15% above your average price and set your stop loss below 8% your average cost.

KEY DATA RELEASES

1. US Retail Sales y/y for February 2025 on Monday, March 17, 2025 (previous: 4.2%)

2. PH Cash remittances for January 2025 on Monday, March 17, 2025 (previous: USD 3.38 billion)

3. US Imports and Exports y/y for January 2025 on Tuesday, March 18, 2025

4. PH Budget Balance for January 2025 on March 18, 2025 (previous: PHP 329.5 billion)

5. US Fed Interest Rate Decision on March 20, 2025 (previous: 4.5%)