Stock Market Weekly: PSEi to remain under pressure

WHAT HAPPENED LAST WEEK

Last week, the Philippine stock market ended at 6,352.12, down 144.20 points (-2.22% week-on-week), as the index struggled with heightened risk aversion ahead of US President Trump’s inauguration as the 47th US President and the release of the US December inflation print.

Most of the decline occurred early in the week, with broad-based losses and foreign selling weighing heavily on sentiment. By midweek, gains from bargain hunting in select sectors were short-lived as a late-session sell-off reversed optimism. The week closed with a modest rebound, driven by opportunistic buying in financials and holding firms.

Investors also digested mixed developments locally and internationally: 1) Fitch Solutions’ upgraded economic growth outlook for the Philippines at 6.3% for 2025 (5.8% for 2024); 2) full year 2024 vehicle sales growth of 8.7% based on data by CAMPI-TMA; and 3) the US December 2024 inflation rate coming in at 2.9% (previous: 2.7%), which bolstered hopes of US Federal Reserve easing this year.

WHAT TO EXPECT THIS WEEK

This week, we expect the PSEi to remain under pressure early in the week, with the potential for a slight rebound towards the end of the week. With the absence of any major local catalysts, concerns over the impending Trump 2.0 policies, the continued rise in US Treasury yields, and the expected rate hike from the Bank of Japan are likely to weigh on the local equities market.

On the domestic front, sentiment may be further dampened by the continued strength of the US dollar against the Philippine peso and the anticipated significant hike in fuel prices, with gasoline rising by PHP 1.35 to PHP 1.60 per liter, diesel by PHP 2.30 to PHP 2.60 per liter, and kerosene by PHP 2.30 to PHP 2.50 per liter. Nevertheless, bargain-hunting as the market hovers near its long-term support levels may offer some cushion, with select oversold stocks presenting opportunities for value buying.

Resistance: 6,400 / 6,600

Support: 6,000 / 6,200

ANALYSIS

The Philippine Stock Exchange index (PSEi) slid below its 6,400 support, driven by heavy foreign selling, ending the week down 2.22% WoW at 6,352.12 (-144.20 points). It continues to trade below key moving averages (20-day, 50-day, 100-day, and 200-day), reflecting sustained bearish sentiment. Momentum indicators show a mixed picture as its RSI, a technical indicator, has recovered from oversold levels but remains below neutral, while MACD indicator stays in bearish territory with no signs of a reversal. With the risk-reward skewed to the downside, accumulating near support is advisable.

STOCK CALLS FOR THE WEEK

Jollibee Foods Corp. (JFC) | BUY | FMSEC TARGET PRICE: PHP 330.00

JFC’s share price has been trending downwards after its failed breakout from its resistance level of PHP 279.80. JFC is currently trading below its 20-day, 50-day, 100-day, and 200-day moving averages (MAs), driving its pullback toward its key support level. On momentum indicators, its MACD and RSI are both below neutral levels, supporting its recent strong downward momentum.

Given its most recent close at PHP 242.60, a reversal is possible due to its close above its key support level. Accumulating JFC at current levels between PHP 245.00-252.00 is advisable. Set stop limit orders at PHP 226 and take profits at PHP 285. For long-term investors, FirstMetroSec has a fundamental target price of PHP 330.00 (+36.03% upside from recent close).

Century Pacific Food, Inc. (CNFP) | BUY ON PULLBACKS | CONSENSUS TARGET PRICE: PHP 45.00

CNPF is positioned for a pullback after failing to reach its second resistance level despite breaking above the PHP 42 resistance. It remains above all key moving averages (20-day, 50-day, 100-day, and 200-day). On momentum indicators, the MACD is still above the signal line, but the RSI has eased from the overbought zone, indicating a potential pullback. Accumulating CNPF around the PHP 40.60 level during the pullback is advisable. Set take-profit levels at PHP 46.69 and stop-loss limits at PHP 37.35. Accumulating once it pulls back around PHP 26.00 is advisable. Take profits around PHP 29.90 and set stop loss limits at PHP 23.92.

International Container Terminal Services, Inc. (ICT) | BUY ON SUPPORT | CONSENSUS TARGET PRICE: PHP 434.00

ICT is currently trading sideways, remaining above the 50-day, 100-day, and 200-day moving averages (MAs) but below the 20-day MA, indicating a potential short-term pullback. Momentum indicators show the MACD slightly below the signal line, while the RSI is in the neutral zone, suggesting a lack of clear direction for the stock. Accumulating ICT at the support level of PHP 369.29 is advisable. Set take-profit levels at PHP 424.39 and stop-loss limits at PHP 339.75.

KEY DATA RELEASES

1. US Initial Jobless Claims as of January 18, 2025, on Thursday, January 23, 2025 (previous: 217k)

2. PH Balance of Trade for December 2024 on Friday, January 24, 2025 (previous: -USD 4.77 billion)

3. JP BOJ Interest Rate Decision on Friday, January 24, 2025

4. PH Imports and Exports year-on-year for December 2024 on Friday, January 24, 2025.

(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.)