INVESTORS sold SM Investments Corp. (SMIC) last week as the market remained cautious amid global tightening financial conditions to contain rising consumer prices.
Data from the Philippine Stock Exchange showed a total of 1.15 million shares worth P964.92 million were traded from May 23 to 27.
Shares went down by 0.8% week on week, finishing at P838.50 apiece on Friday from its P845 closing on May 20. For the year, the stock has dropped by 10%.
Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that inflationary pressures, the Russia-Ukraine conflict, China’s lockdown, and tightening financial conditions still played a part in how investors dealt with the stock market last week.
“Inflationary pressures remain a major concern for investors, as the nation’s headline inflation figures released earlier this month showed a bigger-than-expected jump, indicating that prices will remain high in the near term,” he said via e-mail.
“Traders and investors came in and took advantage of the lower price levels. This is the tug-of-war in the market between those saying the market has become attractively valued, versus those who are saying ‘not really,’ because it’s not factoring in much slower growth,” he added.
Rising borrowing costs meant to temper inflation could slow down expansionary plans of companies such as SMIC this year, Mr. Arce said.
“The rate increase translates to a lower number of firms like SMIC doing expansionary activities and less households making purchases of real estate or durable goods,” he said.
The latest inflation rate was posted at 4.9% in April. The Bangko Sentral ng Pilipinas said inflation could exceed 5% in the next few months amid higher oil and non-oil price increases brought by the ongoing Russia-Ukraine war.
To address this, the central bank increased key rates by 25 basis points on May 19. This was the first rate hike since 2018.
It also revised its inflation forecast to 4.6% from 4.3% previously, already above the 2-4% target band.
“The market is generally becoming less volatile now, which typically means increased demand for riskier assets,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in a separate e-mail.
“Add this to the fact that the economic team of the next administration has started to take shape, boosting investor confidence. There was most likely a rotation out of your usual blue chips — index heavyweights like SM — into stocks that are more volatile,” she said, referring to the company’s ticker symbol.
The holding firm of the SM group of companies booked an attributable net profit of P12 billion in the first quarter, higher by 26.7% from P9.47 billion in the same three months a year ago.
Mr. Arce expects SMIC to net P10.1 billion in the second quarter. He estimated the company to finish the year with around P46.5 billion in profit.
Ms. Agravio forecasts a P10-P15 billion second-quarter net income, and a full-year net profit of between P45 billion and P50 billion.
Both their full-year bottom line forecasts were lower than the company’s P52.73-billion consolidated net income in 2021. Net income attributable to owners of the parent company climbed 64.6% last year to P38.50 billion.
For the week, Mr. Arce put his support and resistance levels at P813 and P855.50, respectively.
Meanwhile, Ms. Agravio placed her support and resistance levels at P800 and P870, respectively. — Bernadette Therese M. Gadon
