COL: PH stock market not heading to bear territory

COL head of research April Lee-Tan discussing the stock market with SharePhil

THE LOCAL stock market is unlikely to slip into “bear” territory despite external jitters arising from China’s turbulent asset market and uncertainties over the US Federal Reserve’s interest rate hike, leading online stock brokerage COL Financial said.

COL head of research April Lee-Tan, in a presentation before the Shareholders’ Association of the Philippines (SharePhil) on Friday, said the local market’s fall had given investors the opportunity to start accumulating equities to take advantage of the country’s favorable long-term outlook.

“This is just a major correction, not a bear market,” Tan said.

But even if COL’s forecast that the Philippines won’t enter the bear market would be incorrect, Tan said investors could take comfort in the fact that bear markets historically did not last too long. While there’s still risk that the contagion would push the local stock market to a freefall, Tan said any visit to bear territory would likely be “short and shallow.”

When a stock barometer falls by 20 percent, the market is deemed to be technically in bear territory.

“We believe that investors can already start accumulating stocks, although we advise them to use peso averaging,” Tan said.

Peso cost averaging refers to the strategy of regularly buying the same stocks or set of stocks – typically blue chip companies – regardless of price levels over a long period of time.

Tan’s recommendation is for investors to “focus on quality larger capitalized liquid stocks trading at attractive valuations as these are expected to lead the market’s eventual recovery.”

“The Philippines still has the best fundamental long-term story globally,” Tan said. She noted that the country was still growing faster than most of its peers, government finances remained healthy, investment spending was picking up, sound banking system and strong current account surplus.

COL is upbeat on the following sectors: airlines, banks, properties, power and conglomerates. Its stock picks are Cebu Pacific, Metropolitan Bank and Trust Co., Banco de Oro Unibank, SM Prime Holdings, Ayala Land Inc., Megaworld Corp., First Gen Corp. and Ayala Corp.