By James A. Loyola

This week the local stock market will be weighed by the announcement of the August inflation rate, which is expected to remain high and lead to an interest rate hike, although investors may begin positioning for the end of the so-called ghost month.

Online brokerage firm 2TradeAsia.com said that, “economic planners have already sent feelers ahead of August inflation’s release on September 5. So far, seven-month inflation has averaged 4.5 percent, and a figure of 5.9 percent would bring the eight-month average to 4.7 percent, above the high-end of 2018’s two-four percent target.”

“While heeding for clues how industry authorities will mitigate supply-side pressure (at least for key staple items), higher CPI (consumer price index) would support expectations for another round of interest rate adjustment from BSP (Bangko Sentral ng Pilipinas),” the firm noted.

Given this, 2TradeAsia said “consumer- or retail-tied shares might take the backseat for now, depending on spending trend for the remainder this year. Expect prospective switch to inflation hedges (property) as the theme shifts to optimizing real returns.”

Meanwhile, as the ghost month draws near its close (September 9), 2TradeAsia said “market participants’ attention would be swayed to prospects in store for the fourth quarter, specifically telco, infra, energy, property/tourism and exploration.”

For Abacus Securities and COL Financial, their pick from the property sector remains Robinsons Land Corporation.

“Over the past two years, RLC’s share price has fallen significantly, underperforming other property companies … However, we believe that the worst is over as profits already increased,” said COL Financial.

It noted that, “valuations remain attractive, with RLC trading at a steep 41.3 percent discount to its net asset value as the company’s turnaround is not yet reflected in its share price.”

While looming rate hikes threaten property firms, Abacus said that, “to mitigate risk, we urge investors to take another look at RLC … it has the highest ratio of recurring revenues among its peers. Corollary to this, it has the smallest exposure to residential sales and interest rate risk.”

COL also reiterated its “buy” recommendation for Semirara Mining and Power Corporation because. “We like SCC since we expect it to be a major beneficiary of the country’s rising power demand …Furthermore, the outlook for its coal mining business has improved due to its higher production level and rising regional coal prices.”

Eagle Equities Head of Research Chris Mangun said, “we are starting September with a lot of confidence and I have no doubt that the index will break and stay above that 8,000 key level. Breaking above it will start a climb to the upside which may even take us to the previous high of 9,000 before the end of the year.”

He noted though that, “it is all going to come down to an increase in trading volume. Asian emerging markets are proving to be stronger than their counterparts in the west and if foreign investors start to take notice of that, we may see a significant increase in foreign funds.”