Share prices closed down Thursday on last-minute selling due to lack of strong leads.
The peso closed lower.
Stockbroker BDO Securities meanwhile encouraged investors to look for stocks with strong balance sheets and resilient business models in the face of elevated inflation.
The Philippine Stock Exchange index was down 7.19 points, a 0.11 percent drop to 6,575.67.
The broader All Shares index was down 0.31points or 0.009 percent to 3,496.90.
Gainers edged losers 90 to 74 with 51 stocks unchanged. Trading turnover reached P5.46 billion.
The peso closed at 57.16 to the dollar, down from 57.11 on Wednesday. The currency opened at 57.10, and hit a high of 56.975 and a low of 57.175. Trading turnover reached $909.8 million.
Other currencies in the region were slightly weaker, as the greenback hovered near recent peaks on increased bets that the Fed’s aggressive tightening streak to curb sticky inflation is far from over.
Claire Alviar, analyst at Philstocks Financial Inc., said the market’s drop was driven by last-minute profit-taking.
“The market failed to manage to stay in the green and above the 6,600 support level as investors took some gains amid a lack of positive catalyst while waiting for the decision of the Federal Reserve and Bangko Sentral ng Pilipinas on interest rates,” she said.
Most actively traded SM Prime Holdings Inc. was up P0.45 to P36.50. Ayala Corp. was up P158 to P748. Ayala Land Inc. was up P0.20 to P28.60. BDO Unibank Inc. was down P2.60 to P122.50. San Miguel Corp. was up P3 to P98. SM Investments Corp. was down P9.50 to P850. Jollibee Foods Corp. was down P2.60 to P247.40. Globe Telecom Inc. was up P8 to P2,178. Emperador Inc. was up P0.25 to P20.55. Solar Philippines Nueva Ecija Corp. was down P0.01 to P1.50.
Meanwhile, BDO Securities in a statement said inflation now averages 4.9 percent year-to-date and that it expects it to settle at 5.3 percent for this fiscal year assuming inflation will peak in the third quarter.
Inflation slowed to 6.3 percent in August from 6.4 percent in July due to easing oil prices and slower increases in food prices.
However, the Philippines remains vulnerable to inflation risks given its status as a food and energy importer, BDO Securities said.
“Philippine inflation basket is more sensitive to food and energy commodities (oil, coal, rice). While commodity price trends have softened as of late (due to slowing global growth concerns), we think domestic factors (i.e. tight food supply) are set to become the primary drivers of inflation going forward,” said Abigail Chiw, BDO Securities head of research.
Chiw said in response, investors can explore stocks that offer products and services with enduring demand and cost pass-through structure.
“These are better positioned to manage inflation headwinds,” she said.
Cost pass-through describes what happens when a business adjusts the price of its products or services as a result of change in the cost of producing them.
“Given the uncertain macroeconomic backdrop, we suggest investors to consider quality names in consumer, banks, property, and conglomerates, or sectors which we expect to still benefit from positive reopening dynamics and offer healthy earnings growth at reasonable valuations. Several of these names are also trading at deep discounts (i.e. below book value) and are good value recovery plays, in our view,” Chiw said.
Chiw said investors can look at Puregold Price Club Inc., Robinsons Retail Holdings Inc. and D&L Industries Inc.
Bank of the Philippine Islands (BPI), Metropolitan Bank and Trust Corp. (Metrobank) and Security Bank Corp. are “decent picks” for the financial sector, Chiw said.
“Ayala Land Inc., Megaworld Corp. and Robinsons Land Corp. are the stock picks for the property sector, while Alliance Global Group Inc., SM Investments Corp. and GT Capital Holdings Inc. are strong bets among the conglomerates,” she added.
