Weekly Equities Summary and Outlook : September 2 – September 6, 2019
Outlook. Expect the market to consolidate this week to 7,700-8,000 level but with an upward bias as investors bet on fresh global stimulus amid weak economic data from China, US and EU. More support measures are expected from China after its exports surprisingly drop in August as shipments to the US sharply declined, while weakening jobs trend in the US further stoked recession fears and expectation of another 25-bp Fed rate cut on September 19 (PH time). Locally, the government appeased fears of inflation upticks from higher food prices after the Department of Agriculture’s confirmation of the presence of African swine flu (ASF) in some parts of Luzon. NEDA said that ASF has no significant impact to inflation for the remainder of the year as consumers can seek alternatives to pork such as poultry, beef and fish.Key economic data to be released this week are the external trade for July (Sept. 10).
Market Review. The PSEi ended lower last week by 46.2 points to 7,933.5 (-0.6% week-on-week, w/w) amid jittery markets overseas due to escalation of US-China trade war. The first two trading sessions saw the index dropped by a huge 174.9 points as investors digested the new round of US-China tariff increases beginning September 1. However, risk-on sentiment returned for the rest of the week on news that US and China would resume trade talks in Washington next month. Year-to-date (YTD), the local bellwether has eked 6.3% gains, on the back of the P9.6bn net foreign inflows for the year.
Regional Markets. . Most markets rallied last week, with China (+3.9%) and Hong Kong (+3.8%) markets posting the best weekly gains on prospects of the de-escalation of US-China trade tension and China’s further loosening of monetary policy thru RRR cut to arrest its slowing economy. Meanwhile, India (-0.9%), the Philippines (-0.6%), Malaysia (-0.5%) and Indonesia (-0.3%) bucked global market rally .
Currencies. The Philippine peso firmed up against the USD for the third straight week, gaining 14 centavos (+0.3% w/w) to close on Friday at P51.90/$. This came following the release of lower-than-expected August inflation of 1.7% vs consensus of 1.8% and renewed optimism over US-China trade talks.
The House of Representatives approved yesterday on the third and final reading House Bill 304 or the proposed Passive Income and Financial Intermediary Tax Act (PIFITA), which encompasses the fourth package of the government’s Comprehensive Tax Reform Package (CTRP). PIFITA aims to make passive income and financial intermediary taxes simpler, fairer, and regionally competitive. Some of the provisions of the bills are:
Globe Telecom (GLO) hopes to turn its fintech arm Globe Fintech Innovation, Inc. (Mynt), the operator of its mobile wallet GCash, into a billion dollar company in the next two years. Mynt is owned by GLO, Ayala Corporation and Alibaba’s Ant Financial. GCash has 20mn registered users and more than 63,000 partner merchants nationwide. GLO closed yesterday at P1,980/share, up 4.2% YTD.Read full article here.
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