Weekly Report

The Market Blueprint 24 September 2018

Sectoral Performance Top Foreign Buying / Selling

PSEi A ll Shares -1.1% Propert y 0.4% GLO 610,298,630 BDO (532,286,375)
7,383.00 F inancials -1.1% Serv ices -0.8%
URC
ICT
314,533,224
216,930,330
ALI
AC
(508,728,785)
(504,569,290)
-30.1pts -0.41% Indust rials 1.6% M ining & Oil -7.0% SECB 79,847,719 BPI (452,868,738)
YTD % Change: -13.73% Holding F irms -2.0% SM 71,801,515 MBT (310,191,221)

Philippine Stock Exchange Index

12,000 8,000 The PSEi lost 30.6 points last week, down by 0.41% w-o-
10,000
w to end at 7,383. This brings month-to-date (MTD) per-
formance of the index down by 472.71 points (-6.01%
8,000 7,413.56
7,383.00 MTD). The local market dropped after U.S. President
7,286.34 7,221.23
6,000 7,134.73 7,000 Trump announced that the U.S. will impose a 10% tariff
4,000
on US$200bn worth of Chinese goods on 24 Sept 2018.
China then retaliated with a US$60bn tariff on U.S.
2,000
goods also effective on the same date. On the local front,
- 6,000 the PSEi further faced downward pressure as more news
17-Sep 18-Sep 19-Sep 20-Sep 21-Sep
Market Value TO in PhP mln (left axis) PSEi Level (right axis) flow surfaced on the extent of the damage brought by
typhoon Ompong (Mangkhut). During the latter part of
PSEi Top 5 Gainers / Losers
the week, the market rebounded (biggest one-day jump
URC 6.9%
since 25 Jan 2016) as investors realigned portfolios to
JGS 3.8% index changes by the FTSE.
BDO 3.1%

GT CA P 2.8% This week, we expect downward pressure on the market

2.6%
PCOR as prices normalize post-September FTSE rebalancing. On
-5.9% LT G
the foreign front, trade tensions are expected to further
-6.4% S CC
-6.8% M PI escalate after China scrapped its trade discussions with
-7.4% S ECB the U.S. following reports that China will no longer send
-10.1% RLC
Vice Premier Liu He to Washington. Expectations of a BSP
rate hike may further support the market’s downward
Economic Data
bias this week.
Philippine s
Pe riod Actua l Pre vious Fore ca s t Unit
OF Remittances Jul-18 5.2 -4.5 5.1 %
Balance of Payments Aug-18 1.27 -0.5 - US$
Unite d S ta te s Our picks for this week:
Pe riod Actua l Pre vious Fore ca s t Unit
Housing Starts
Initial Jobless Claims
Aug-18
20-Sep
1.28
201.0
1.17
204.0
1.25
208.0
mn
'000
 Semirara Mining and Power Corp. (SCC) — BUY
Source: Wall Street Journal, Econoday, Bloomberg, Thomson Reuters
 LT Group, Inc. (LTG) — BUY
 Megawide Construction Corp. (MWIDE) — BUY

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Market Highlights. The PSEi lost 30.6 points last week, down by
0.41% w-o-w to end at 7,383. This brings month-to-date (MTD)
Picks for the week performance of the index down by 472.71 points (-6.01% MTD).
The local market dropped after U.S. President Trump announced
that the U.S. will impose a 10% tariff on US$200bn worth of Chi-
₱4 0 .1 nese goods on 24 Sept 2018. China then retaliated with a
Semirara Mining and Power Corp. US$60bn tariff on U.S. goods also effective on the same date. On
BUY | 12M Target Price: P40.1
the local front, the PSEi further faced downward pressure as more
news flow surfaced on the extent of the damage brought by ty-
SCC dropped last week, following negative sentiment phoon Ompong (Mangkhut). During the latter part of the week,
triggered by issues on landslides in relation to small-scale
SCC mining. This led to prices trading at its 52-week low at the market rebounded (biggest one-day jump since 25 Jan 2016)
the latter part of last week. as investors realigned portfolios to index changes by the FTSE.
The index breadth was slightly negative, with 16 losers versus 13
Bargain hunters may look to buy the stock at current
prices to enter near oversold levels. Setting S1 at 27.00 gainers. Average Daily Turnover value was P6.1bn. Foreigners were
₱27.2 NET SELLERS by P1.7bn.
Last price
URC (+6.8%), on continued uptrend, had one of the top net for-
eign buying last week at P190m. JGS (+3.9%) and BDO (+3.1%)
rebounded after being heavily sold down earlier this month.

On the other hand, RLC (-10.1%) dropped after it had one of the
top net foreign selling last week at P104.6m. SECB (-7.4%) mean-
₱2 1 .0
while was down last week after it issued US$300m 4.50% Senior
LT Group, Inc.
Unsecured Fixed Rate Notes due in September 2023. The issuance
BUY|12M Target Price: P21.0 of Unsecured Fixed Rate Notes could lead to higher funding cost
and limit the bank’s expected margin expansion.
LTG went down this week as prices broke through its
previous support of P15.60, which is now within
LTG oversold levels. The movement came about from news
that TRAIN 2 plus will further increase the taxes at- Macro Update and Market Outlook. This week, we expect down-
tributed to sin products.
ward pressure on the market as prices normalize post-September
While the news on Train 2 Plus’ impact on LTG has FTSE rebalancing. On the foreign front, trade tensions are ex-
₱15.0 weighed on the stock’s near term sentiment, we
believe that the passage of TRAIN 2 will still have to
pected to further escalate after China scrapped its trade discus-
₱6.2 face challenges during the Senate readings as they sions with the U.S. following reports that China will no longer
Last price
ponder on its effects. Stock price is currently trading at send Vice Premier Liu He to Washington. Expectations of a BSP
a discount compared to consensus target. In terms of
technicals, LTG is now trading at oversold levels with rate hike may further support the market’s downward bias this
RSI at 26.3 week.

The key events to watch out for this week are the results of the
monetary policy meetings of the Bangko Sentral ng Pilipinas (BSP)
and the U.S. Federal Reserve’s Federal Open Market Committee
₱2 9 .1 (FOMC) on Thursday (September 27). Bloomberg survey estimates
that the FOMC and the BSP will raise rates by 25 and 50 bps, re-
Megawide Cons truction Corp.* spectively. The third reading of the 2Q18 U.S. GDP (est. 4.3%; 2nd
BUY | 12M Target Price: P29.1 reading: 4.2%) is also scheduled for release on Thursday, Septem-
MWIDE continues its downtrend as it breaks recent
ber 27.
support levels. The stock is down 11.6% month-to-
MWIDE date. However, the stock reached oversold levels with
RSI at 23.21.

Counter trend traders may look to buy the stock at

oversold levels and try selling on the bounce. Keep
₱16.0 stops below P15.95 (S1). Resistance levels are at
P16.90 (R1) and P17.9 (R2).
Last price

*FMSBC Target Price

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PSEi Weekly Technical Analysis

ANALYSIS:
SUPPORT: 7,170-7,250 RESISTANCE: 7,800-7,900

 Last week, the PSEi broke through its recent support

levels. However, at the latter part of the week, the
market recovered after reaching oversold levels.

 Looking at indicators, both MACD and the signal

line are trading below the zero line with the bearish
divergence widening. We expect the downtrend to
continue.

Source: AmiBroker

TRADING PLAN:

 Wait for prices to confirm support levels before en-

tering. Enter if S1 (7,170-7,250) holds.

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