Stock Market Weekly: Room for gains 

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) rose by 300.32 points, closing at 6,298.29 (+5.01% week-on-week), primarily driven by bargain hunting post-MSCI rebalancing. Furthermore, the February 2025 inflation rate of 2.1% – which fell below both the consensus estimate and January 2025’s rate of 2.9%, along with positive full-year earnings reports from several index names – boosted investor risk appetite.

The US labor market added 151K jobs in February 2025 – lower than the consensus estimate of 160K additions and higher than January 2025’s 125K – with most of the job gains coming from healthcare (+52K), financial activities (+21K), and transportation and warehouse (+18K). The unemployment rate printed higher at 4.1% (estimates: 4.0%; January 2025: 4.0%). Labor force participation rate came in at 62.4% (January 2025: 62.6%).

WHAT TO EXPECT THIS WEEK

This week, we expect the market to continue to trade higher. From a technical perspective, there is room for further gains as the PSEi has not yet reached overbought levels. The recent release of Philippine inflation data and US employment figures give leeway for the Bangko Sentral ng Pilipinas (BSP) and the US Fed to continue to shift rates to neutral. Additionally, the combination of lower risk-free rates and a weaker US dollar relative to the Philippine peso is supportive of a risk-on environment. Key risk to our call would be higher-than-expected US inflation data.

Resistance: 6,400 / 6,600

Support: 6,000 / 6,200

ANALYSIS

The PSEi increased 5.01% WoW to 6,298.29 (+300.32 points), breaking past its 6,200 resistance as well as its 20- and 50-day moving averages. With the index now trending upward, accumulating on sustained strength is advisable. Key support levels are set at 6,000 and 6,200, while resistance levels are at 6,400 and 6,600.

STOCK CALLS FOR THE WEEK

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

MER exhibits bullish momentum after reaching a new all-time high of PHP 520.00 and remains above all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day MAs). On momentum indicators, MACD is positioned above the signal line, indicating strengthening of the stock.

However, with the RSI approaching overbought levels, and the stock easing after breaking above its PHP 500.00 resistance, MER might be due for a pullback. Accumulating MER once it pulls back around the PHP 480.00 level is advisable. Take profits 15% above your average price and set your stop loss 8% below your average cost.

RL Commercial REIT, Inc. (RCR) | 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 (March 21, 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 PHP 6.10/PHP 6.00) is advisable. Take profits at PHP 7.02 and set stop loss limits at PHP 5.61.

Manila Water Company, Inc. (MWC) | BUY ON SUPPORT | CONSENSUS TARGET PRICE: PHP 33.15

MWC’s share price has been trading above its 20-day, 50-day, 100-day, and 200-day moving averages (MAs), with momentum indicators MACD and RSI above neutral levels, which support its recent upward momentum.

However, the risk is skewed toward the downside, given that its price has rejected its resistance level at PHP 31.00. MWC can reach its key support level at PHP 26.41. Therefore, accumulating near its key support level at PHP 26.41 is advisable. Accumulating MWC on support at PHP 26.41 is advisable. Set stop limit orders at PHP 24.30 and take profits at PHP 30.37.

KEY DATA RELEASES

1. PH Foreign Direct Investment for December 2024 on March 11, 2025 (previous: USD 0.9 billion)

2. US Inflation Rate y/y for February 2025 on March 12, 2025 (estimates: 2.9%; previous: 3%)

3. US Consumer Price Index (CPI) for February 2025 on March 12, 2025

4. US Initial Jobless Claims for March 2025 on March 13, 2025 (estimates: 225K; previous: 221K)

5. PH Cash remittances for January 2025 on March 14, 2025 (previous: USD 3.38 billion)