The local stock market was closed Friday in observance of All Saints’ Day, initiating a long weekend break that sent many investors taking profit on Thursday.
During the shortened trading week, the main-share Philippine Stock Exchange index gained 45.57 points or 0.7 percent to close at 6,585.38 on Thursday.
The market had risen as investors expected the US Federal Open Market Committee (FOMC) meeting to keep an aggressive monetary stimulus but local investors locked up gains ahead of the long weekend break. At the same time, some investors are starting to price in the start of the US Fed’s tapering of monetary stimulus by early next year.
In the October issue of The Market Call, a joint publication by First Metro Investment Corp. and the University of Asia and the Pacific, the research cited a valuation indicator—spread between MSCI Philippines earning yield and US 10-year yield—indicating weaker market performance in the next 12 months.
The research said forward 12-month price-to-earnings ratio of the PSEi also remained stretched from a historical perspective.
“With these in mind, we prefer a tactical approach with a long-term investment horizon rather than focusing on short-term adjustments to risk events and high frequency macro data,” FMIC-UA&P said.
“We favor equities that can leverage the ‘Philippine Macro Story’ and have clear earnings visibility in the next 12 months. Consumer stocks are our top sector pick,” it said. Doris C. Dumlao