Maybank ATR Kim Eng picks: Go after consumer-, infra-related stocks

The country’s stock barometer may offer little room to rise this year, but investors can still make money from selective stock picking, according to analysts from Maybank ATR Kim Eng Securities.

The Philippine Stock Exchange index (PSEi) may end at 7,350 this year, Maybank ATR head of research Michael Bengson said in a briefing.

He said the market should be on the lookout for the direction of the tax reform package and its impact on the budget deficit. “So if the deficit is bigger or goes down in a significant degree, that will have an impact on interest rates and have a knock-on effect on the PSEi. That will be a negative,” he said.

In an interview on the sidelines of the briefing, Maybank ATR president Lorenzo Lichauco said the local stock market was already “fairly valued” in terms of historical price to earnings (P/E) ratio. In the last five years, P/E ratio has averaged 17x, which meant investors were willing to pay 17 times the kind of money they expect to make from the market.

This year, Bengson said it won’t be a liquidity-driven market but a “stock picking market.”

Maybank ATR favors the consumer and infrastructure themes.

For the consumer theme, Maybank ATR’s top stock picks are Robinsons Retail Holdings Inc., Puregold Price Club Inc. and Jollibee Foods Corp. For the infrastructure theme, its top picks are Manila Water Co., Ayala Corp. and Metro Pacific Investments. Its lone stock pick from the banking sector is BDO Unibank.

Bengson advised to avoid the telecom sector while putting caution on the property sector, except for the big ones such as SM Prime and Ayala land Inc., due to rising interest rates. —DORIS DUMLAO-ABADILLA