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Philippine stocks seen to rise

Following a spectacular week of gains, analysts remained positive on Philippines stocks. The consensus is that high valuations can trigger pockets of profit-taking but the overall trend remains bullish and even “euphoric” for now.

The benchmark Philippine Stock Exchange index (PSEi) gained 2.7 percent last week, with Friday alone providing a 1.72-percent jump for the index to hit a fresh record high of 7,215.35. This came a day after the country received an investment-grade rating from Standard and Poor’s, a month after the Fitch Ratings upgrade.

“The PSEi will continue to astound investors with its strength,” Maria Arlysa Narciso, equities analyst with stockbrokerage firm AB Capital Securities Inc., said in a weekly outlook report. “The low interest rates, strong peso, improving growth rate and the government’s transparency all contribute to [the Philippines] becoming one of the favored investment destinations in Asia. Meanwhile, share prices have reached high levels but the market’s appetite remains strong.”

Jonathan Ravelas, chief strategist with BDO Unibank Inc., said investors remained upbeat. He noted that while Friday’s close put the PSEi near his own target of about 7,300, continued stable economic fundamentals might provide investors with further upside.

“We have low interest rates and stable inflation so this is still a conducive environment for investors,” Ravelas said. “The Philippines really is the darling of the market now.”

As with previous instances when the market showed continued strength, Ravelas said that vulnerabilities remained and some investors could see opportunities to book profits. The PSEi has gained about 24 percent so far this year, after rising 33 percent in 2012.

Ravelas said the Philippines has indeed achieved a higher growth trajectory but that more is needed to be done to encourage job-creating direct foreign investments such as bringing down costs and improving the ease of doing business. Despite high valuations, he said opportunities remained, specifically for conglomerates with large infrastructure-related assets as well as the power-generation sector.—Miguel R. Camus

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Tags: Finance , forecasts , Philippines , stocks

  • carlcid

    Yes, the stock and property markets provide only temporary impetus. Unless foreign direct investments are forthcoming, the Philippines will only see the illusion of hot money. Hot money can disappear like a thief in the night, and the Philippine economy will unravel in the blink of an eye. Then the pain will set in. And the pain will be ever so much more excruciating than what the Philippines experienced before, because we never fell from such great heights. Witness the anguish of Ireland, Greece, Cyprus, Iceland, California, Florida and far too many examples to mention. They were all riding high once upon a time, with A+ investment grade ratings, far superior to the Philippines’ measly BBB ratings. Yet, if one is not vigilant and circumspect, the mighty can fall. Instead of bragging and breast-beating, this administration needs to ensure that the benefits of investment grade will be lasting. And that starts with job-creation, infrastructure-building and education!

  • Prangka

    We think of jobs to provide impetus for continuing growth. But jobs that lack proper education only provide temporary relief for jobless juans. As long as the economy is doing good, jobs will be open for the grab. But when the economy is down the first one to get hit are those whose jobs that require only able bodies and little mental capacities. But if our government would just give priority to education especially now that we are so liquid, a minimum 20 years investment on serious education would definitely change the landscape for Philippine. Think of Hongkong, Singapore and South Korea right now. We can be like them if government spends more fund into it than building waiting shed. We can regain the lost glory that was once our pride.

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