Stock Market Weekly: Digesting emerging headwinds 

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) closed the week marginally higher, gaining 0.11% week-on-week (w/w) to settle at 6,465.53, up by 7.30 points. The local bourse opened the week on a positive note, buoyed by optimism over the temporary easing of trade tensions between the US and China.

Both countries agreed to a 90-day truce involving reciprocal tariff reductions, which lifted investor sentiment. Mid-week trading saw heightened activity driven by the MSCI Quarterly Index Rebalancing (QIR), although this was tempered by profit-taking. Despite the volatility, strong foreign buying helped the index recover, ending the week flat.

Investor sentiment remained cautious, weighed down by the absence of fresh catalysts and mixed first-quarter 2025 earnings results from several index heavyweights.

WHAT TO EXPECT THIS WEEK

Looking ahead, we anticipate downward pressure on the index as investors digest emerging headwinds. They include US President Donald Trump’s proposal to impose a 5% excise tax on remittances sent outside the US.

This could significantly impact remittance-dependent economies like the Philippines. Additionally, Moody’s recent downgrade of the US credit rating—due to rising debt levels, persistent budget deficits, and mounting interest expenses—may dampen global market sentiment. Nevertheless, any progress toward a comprehensive US-China trade agreement could serve as a positive catalyst, potentially offsetting some of the bearish undertones.

Resistance: 6,800 / 6,600

Support: 6,200 / 6,400

ANALYSIS

The PSEi increased 0.11% w/w to 6,465.53 (+7.30 points), remaining above its 6,400 support as well as its 20-day, 50-day, and 100-day moving averages (MA). With the index now retesting its 6,400 support, accumulating at this level is advisable. Key support levels are set at 6,200 and 6,400, while resistance levels are at 6,600 and 6,800.

STOCK CALLS FOR THE WEEK

Aboitiz Equity Ventures, Inc. (AEV) | BUY | CONSENSUS TARGET PRICE: PHP 53.25

Following the MSCI index reclassification announcement, the stock surged as much as 11% intraday, forming a notable gap-up at the open. After enduring a downtrend triggered by its removal from the MSCI Standard Index last year, the stock has since been consolidating, facing a near-term resistance around PHP 35.00.

The recent break above this resistance suggests a sustainable uptrend, and investors may consider accumulating on dips ahead of the index changes taking effect to take advantage of upside from the fund flows. Accumulating AEV on dips from current levels down to PHP 36.00 is advisable. Take profits at PHP 41.40 and set stop-loss limits at PHP 33.12.

OceanaGold (Philippines), Inc. (OGP) | BUY ON PULLBACK | NO CONSENSUS TARGET PRICE

OGP is forming a double-top pattern and has recently crossed below its 50-day moving average, suggesting bearish momentum. On momentum indicators, the MACD is trending below the signal line, while the RSI is also moving downward—both indicating continued weakness.

Accumulating OGP once it pulls back around its support level at PHP 15.00–15.15 is advisable. Take profits around PHP 17.34 and set stop-loss limits at PHP 13.87.

SM Prime Holdings, Inc. (SMPH) | BUY ON PULLBACKS | FMSEC TARGET PRICE: PHP 32.00

SMPH has broken out of its downward channel and is now consolidating. The market appears undecided, weighing broader real estate concerns against the company’s solid fundamentals. While a breakout appears to be underway, the stock may still retest the level near its 50-day moving average (MA) as it struggles to clear its current consolidation range.

Hence, accumulating on dips within the PHP 24.00–23.40 range is advisable. Take profits at PHP 27.26 and set stop-loss limits at PHP 21.80. For long-term investors, we maintain a fundamental target price of PHP 32.00.

KEY DATA RELEASES

1. US S&P Global Manufacturing Purchasing Managers’ Index (PMI) Flash – Thursday, May 22, 2025 (estimates: 50.1; previous: 50.2)

2. US Initial Jobless Claims as of May 17, 2025 – Thursday, May 22, 2025 (previous: 229k; estimates: 231k)