Last week, the PSEi index gained 48.6 points or 2.08 percent to close at 2,378.04, led by banking and property issues. Average daily volume rose to 5.82 billion shares worth P2.2 billion from 2.98 billion shares worth P1.81 billion the previous week. This was attributed to a stronger peso and an improving government fiscal position.
Rommel Macapagal of Westlink Global Equities said investors may exercise caution today, the fifth anniversary of the Sept. 11 terror attacks in the United States.
Jose Antonio Alitagtag of Phil Equity Partners said stocks will take their cue on consumer figures released last week.
The government announces Thursday that second quarter GDP rose 5.5 percent from a year earlier and 1.7 percent from the first quarter.
Macquarie Securities said consumer stocks offer a good investment alternative due to rising private consumption on the back of robust remittances from overseas Filipino workers.
The foreign broker firm’s top three picks among consumer stocks include the Gokongwei-owned Universal Robina Corp., food and beverage giant San Miguel Corp., and fastfood giant Jollibee Foods Corp.
"We are positive on the Philippines given the healthy growth of OFW remittances and the expectation of government pump-priming in the second-half, indicating the Philippines is well placed for a domestic demand-led upswing in GDP growth in the latter half of 2006," Macquarie said.
"The benefit of OFW remittances is spread across property, banks, as well as consumer plays. At this stage, we fail to see a situation that would materially impact OFW remittances over the coming years," Macquarie Securities added.
Among its top three picks, Macquarie said Universal Robina Corp. (URC) has the biggest potential, citing the snacks and drink company‚s estimated EPS CAGR (earnings per share compounded annual growth rate) of 22 percent from 2005 to 2008.
Macquarie has an "outperform" rating and a target price of P24 for URC, the food unit of conglomerate JG Summit Holdings Inc.
The DBS Group, meanwhile, expects the peso to continue its gradual appreciation and may likely go up to P50 to the dollar level by the end of 2006, aided by strong remittances from OFWs.
Remittances reached nearly $6 billion in the first half this year or 15.4 percent higher than the year ago level and well on track to exceed the $10.7 billion accumulated in 2005.
On average, remittances have been growing by an average $130 million every month.
Since the start of 2006, foreign reserves have been rising at a steady pace, averaging $150 million a month, to $21.27 billion by July. If this pace is sustained, foreign reserves would rise to $29.23 billion by end-2010.
Issues that led the market uptick last week include Ayala Corp., which reached its seven-year high. Heavyweight issue Ayala Corp. also led the index’s charge as it broke through the P477.50 mark, beating its May 2006 high of P475.