Weekly Equities Summary and Outlook : May 28 – June 01, 2018
Outlook. We expect the market to trade between 7,500-7,700, with a downward bias as the market awaits May inflation data which is expected to hit a fresh new high, coupled with lingering concerns that US tariffs on its key allies could reignite a trade war. Nonetheless, we expect the market’s strong support to hold at 7,500. Key economic indicators to watch out for this week are inflation on May 5 and external trade on May 8.
Market Review. PSEi closed flat (-17.3 points or -0.2% week-on-week, w/w) on Friday to 7,630.3 after the market recovered its losses from the May 30 selloff that shaved the index by 132.2 points triggered by the political turmoil in Italy and renewed fears of a trade war between the US & China. Month-on-month (m/m), the local bellwether sustained fourth straight month of decline, albeit the slowest at 2.4%. From its peak of 9,058 on Jan. 29, the local bellwether went down by 15.8%.
Bangko Sentral ng Pilipinas (BSP) guided for an accelerated year-on-year (y/y) inflation in May to 4.6%-5.4% from April’s 4.5%, driven by higher global oil prices and rice prices and partially offset by lower MER rates and price normalization of selected fruits and fish items. Economists expect May inflation to average 4.9%, the fastest pace in at least five years.
Robinsons Land Corporation (RLC) has announced that it will develop a dormitory and shared office spaces in the future catering to individuals who cannot afford to buy their own properties and businesses that cannot afford to rent the entire office floor, respectively. RLC is guiding for a robust growth in its business -- net leasable office area is expected to grow by 28% this year to 518K sqm and 18% to 613K sqm in 2019 from end-2017’s level of 405K sqm. Residential reservation sales growth is expected to hit more than 100% in Q2, while mall segment will end 2018 with gross leasable area to 1.5mn sqm and 1.6mn sqm by 2019. RLC is one of our two property stock picks during our Annual Briefing in January 2018 on account of a recovery play. RLC share prices closed on Friday at P20.70/share, +1% YTD.
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