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Stock Market Weekly: Gains may continue
With stable general elections, we may see investors taking their cue from more earnings and data releases this week.
By First Metro Securities Research
WHAT HAPPENED LAST WEEK
Last week, the Philippine Stock Exchange index (PSEi) ended a volatile trading week with gains, rising 0.72% week-on-week (w/w) to 6,458.20 (+46.34 points). The market began the week cautiously as investors awaited key economic data releases.
As it happened, the local bourse rallied mid-week on cooler-than-expected April 2025 inflation, which came in at 1.4% (previous: 1.8%; estimates: 1.8%), fueling hopes for a rate cut by the Bangko Sentral ng Pilipinas (BSP) next month. However, sentiment deteriorated sharply on Thursday due to two main factors.
On one hand, the country’s 1Q 2025 GDP growth at 5.4% did not meet expectations – falling below both consensus estimates of 5.7% and the government’s 6–8% target range for 2025. On the other hand, the US Federal Reserve kept policy rates unchanged, citing increased risks of higher unemployment and inflation, which stoked US recession fears. By end of the week, the local bourse managed to bounce back as investors sought bargains, further buoyed by improved global sentiment on news of a US–UK trade agreement.
WHAT TO EXPECT THIS WEEK
This week, we expect the PSEi to extend its gains amid a slew of key data and earnings releases. Following stable general elections, the local bourse is likely to take cues from the earnings releases of several index heavyweights as the deadline for 1Q 2025 approaches.
All eyes will also be on the results of the MSCI Quarterly Index Rebalancing (QIR) to be announced on May 13, 2025 (11PM CEST), with changes taking effect at market close on May 30, 2025 (effective June 2, 2025). Positive sentiment from abroad may also spill over as the US and China announced a major breakthrough in trade negotiations, agreeing to a 90-day pause and reductions in reciprocal tariffs. However, gains may be capped by profit-taking – with investors potentially selling on the news – and rising US 10-year bond yields, which have breached the 4.4% level on the improving trade outlook.
Resistance: 6,800 / 6,600
Support: 6,200 / 6,400
ANALYSIS
The PSEi increased 0.72% w/w to 6,458.20 (+46.34 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 trending upward, accumulating on sustained strength is advisable as the overall trend has shifted to bullish. 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
Jollibee Foods Corp. (JFC) | BUY | FMSEC TARGET PRICE: PHP 330.00
JFC is trading below its 50-day, 100-day, and 200-day moving averages (MA), indicating long-term bearish sentiment. After hitting a new 52-week low of PHP 203.00 on April 7, 2025, the stock has been on an uptrend, closing above its 20-day MA, with both RSI and MACD near neutral levels.
Therefore, given the risk is skewed towards the upside prior to the rebalancing date, accumulating at current levels is advisable. Accumulate JFC at PHP 230.00. Set stop limit orders at PHP 212.00 and take profits at PHP 265.00. For long-term investors, FirstMetroSec has a fundamental target price of PHP 330.00.
BDO Unibank, Inc. (BDO) BUY | FMSEC TARGET PRICE: PHP 192.00
BDO’s share price has risen above its 20-day, 50-day, 100-day, and 200-day moving averages (MAs) and is nearing its key resistance level at PHP 167.00. On momentum indicators, its MACD and RSI are slightly above neutral levels, suggesting potential for more growth and a possible breakout at its key resistance level.
Therefore, given the risk is skewed towards the upside, accumulating at current levels is advisable. Accumulate BDO at PHP 165.20. Set stop limit orders at PHP 151.98 and take profits at PHP 189.98. For long-term investors, FirstMetroSec has a fundamental target price of PHP 192.00.
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.
Increase exposure to SMPH between the PHP24.00–23.40 range. Take profits at PHP 27.26 and set stop loss limits at PHP 21.80. For long-term investors, we have a fundamental target price of PHP 32.00.
KEY DATA RELEASES
- Results of PH General Elections, which was held on Monday, May 12, 2025
- PH Foreign Direct Investment for February 2025 released on Monday, May 12, 2025 (previous: USD 700 million)
- US Consumer Price Index (CPI) Inflation year-on-year (y/y) for April 2025 on Tuesday, May 13, 2025 (previous: 2.4%; estimates: 2.4%)
- PH Cash Remittances for March 2025 on Thursday, May 15, 2025 (previous: USD 2.72 billion)
- US Purchasing Managers’ Index (PPI) month-on-month (m/m) for April 2025 on Thursday, May 15, 2025 (previous: -0.4%; estimates: 0.2%)