Stock Market Weekly: Maybe time for bargain hunting 

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) closed the week in the red at 5,997.97, lower by -1.64% week-on-week (WoW). During the week, there were key positive developments, such as the Bangko Sentral ng Pilipinas’ (BSP) decision to cut the RRR by 200 basis points (bps) for large banks (down to 5%) and 150 bps for digital banks (down to 2.5%) effective on March 28, 2025, as well as the Philippines’ removal from the Financial Action Task Force (FATF) gray list. However, these were offset by the announcement of Trump’s tariffs and the implementation of the MSCI Quarterly Rebalancing results.

WHAT TO EXPECT THIS WEEK

The market is set to rebound this week due to bargain hunting and as the overhang from the MSCI February Quarterly Rebalancing exercise fades. Investors may shift their focus toward the release of key economic data and full-year earnings reports, where positives could emerge. Nevertheless, uncertainties regarding US support for Ukraine and its allies, along with new tariffs – including the looming 25% increase on imports from Canada and Mexico beginning March 4, 2025, and an additional 10% on Chinese imports – are downside risks.

Resistance: 6,400 / 6,200

Support: 6,000 / 5,900

ANALYSIS

The PSEi dropped 1.64% WoW to 5,997.97 (-100.07 points). The index remained below all key moving averages (20-day, 50-day, 100-day, and 200-day) due to heavy selling pressure. It also broke past key support at 6,000, with 5,900 as the next cushion, while resistance levels are at 6,200 and 6,400. With the index still finding direction, accumulating on sustained strength above resistance levels is advisable.

STOCK CALLS FOR THE WEEK

Ayala Land, Inc. (ALI) | BUY ON BREAKOUT | FMSEC TARGET PRICE: PHP 35.80

Price action reflects evident bearishness, highlighted by the death cross formation between the 100-day and 200-day moving averages (MA). Momentum indicators remain weak, with sustained high selling volume reinforcing the downtrend. While a rebound from the PHP 22.00 support is possible, confirmation of buying momentum is needed, making a gradual accumulation strategy more favorable at this stage. Since its decline began in October 2024, the 20-day MA has acted as immediate resistance, and a break above this level may confirm a price recovery. Accumulating ALI once it breaks above the 20-day MA (PHP 23.83) is advisable. Take profits at PHP 27.41 and set stop loss limits at PHP 21.92.

Emperador Inc. (EMI) | BUY ON SUPPORT | FMSEC TARGET PRICE: PHP 16.20

EMI has fallen sharply, reaching its 52-week low of PHP 11.28, and trading beneath its 20-day, 50-day, 100-day, and 200-day moving averages (MA). The RSI indicates that the counter is deeply oversold, potentially signaling a short-term bounce or consolidation. Meanwhile, the MACD line is still below the signal line but appears to be converging, suggesting that bearish momentum may be weakening. A crossover above the signal line, coupled with an upward movement in the RSI, could signal a potential bullish reversal. Accumulating EMI on support between PHP 12.72 and PHP 11.92 is advisable. Take profits 15% above your average cost and set stop loss limits 8% below your average cost.

BDO Unibank, Inc. (BDO) BUY ON PULLBACK | FMSEC TARGET PRICE: PHP 167.00

BDO is on a bullish momentum after breaking above its PHP 146.80 resistance and is now testing the PHP 156.82 level, trading above all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day). On momentum indicators, the MACD is above the signal line, indicating strengthening of the stock. However, with the RSI approaching oversold levels, BDO might be due for a pullback. Accumulate BDO once it pulls back around PHP 140.00 level. Take profit around PHP 161.00 and set stop loss limits at PHP 128.80.

KEY DATA RELEASES

1. PH S&P Global Manufacturing PMI for February 2025 on Monday, March 3, 2025 (estimates: 52.8; previous: 52.3)

2. US S&P Global Manufacturing PMI for February 2025 on Monday, March 3, 2025 (estimates: 51.6; previous: 51.2)

3. PH PPI year-on-year for January 2025 on Monday, March 3, 2025 (estimates: 0.8%; previous: 0.2%)

4. PH Inflation Rate YoY for February 2025 on Wednesday, March 5, 2025 (estimates: 2.8%; previous: 2.9%)

5. PH Unemployment Rate for January 2025 on Thursday, March 6, 2025 (estimates: 3.1%; previous: 3.1%)

6. US Initial Jobless Claims as of March 1, 2025, on Thursday, March 6, 2025

7. US Unemployment Rate for February 2025 on Friday, March 7, 2025 (estimates: 4%; previous: 4%)