Energy firms may be the ideal stocks

by Madelaine B. Miraflor – July 10, 2016

from Manila Bulletin

The moratorium imposed by the Indonesian government on coal shipments to the Philippines will only have a minimal impact on the country’s power sector and will not shake the operations of major energy companies.

Online brokerage firm COL Financial Group, Inc. highlighted the power sector in its latest report, specifying that investors must not be worried about the status of energy companies amid the Indonesian coal shipment moratorium.

“ERC [Energy Regulatory Commission] disclosed that the moratorium imposed by the Indonesian government on coal shipments to the Philippines has not affected the operations of the country’s coal-fired power plants. The ERC said that shipments of coal to the Philippines are usually carried by large foreign vessels, while the ban only covers Indonesian vessels,” it added in its latest investment guide.“Indonesia coal shipment moratorium has minimal impact on power plants,” COL Financial said.

COL Financial further noted that most of power generation companies including “Ayala Corp., AboitizPower, and SCC [Semirara Mining and PowerCorp.]” even said that the Indonesian coal ban has not affected their plants’ operations.

As an investment guide, the brokerage also put a buy recommendation on the shares of Energy Development Corp. and First Gen Corp., while it advised investors to hold their shares in AboitizPower and Manila Electric Co. Brokerage 2TradeAsia.Com said that for this week, participants will be taking its cue on developments abroad.

The Bank of England (BoE) will announce on July 14 its decision whether it will cut policy rates or not in the wake of UK’s vote to leave the European Union.

“With increasing efforts of spurring UK’s economy and prospects of stimulus from some developed countries, we might expect the local market to focus on efforts that might be taken by other central banks. Volatility is expected to ensue; investors should take on a cautious stance,” the brokerage said.

It also mentioned different economic data that will be released here and overseas may also cause market uncertainties.

Among global economic data set to be released this week are China’s second quarter gross domestic product (GDP) results and trade balance; US retail sales; and Philippine exports in May.

“Immediate support for Philippine Stock Exchange index [PSEi] is 7,650-7,700, resistance 7,800-7,850,” 2TradeAsia said.

Local mart ended in a losing streak during last week’s trade, with PSEi falling 58 points, or 0.75 percent week-on-week to close at 7,771. This is after investors opted to lock-in gains when the index hit an intra-week high of 7,910.

Cautious tone occurred in the latter part of the week, as some waited for results of US jobs data due Friday,