COL: It’s the year to buy stocks

This 2017 is an opportune year for investors to accumulate Philippine stocks especially whenever the stock barometer falls below its fair valuation of 7,500, leading online stock brokerage COL Financial said.

In a press briefing on Monday, COL head of research April Lee-Tan said it would be difficult to justify premium valuations at present given “unexciting” earnings prospects from corporate Philippines this year. COL expects average corporate earnings to rise by 6.9 percent this year, slower than previous years.

She also cited numerous risks, including higher inflation and interest rates, the weak peso and President Duterte’s policies that may prove “painful” over the short term, including his tax reform program.

But COL continued to have a favorable long-term view on the Philippine economy and the stock market, Tan said. She said the same policies that may be painful in the short-term would be beneficial in the long term, Tan added.

COL said the government needed to implement tax reforms to raise enough funds to meet its goal of increasing disbursements from around 18.2 percent of the gross domestic product (GDP) in 2016 to around 20.2 percent in 2019.

In a research note, Tan said the planned reduction in personal income taxes that would be implemented together with the first package of the tax reform policy in the second half of 2017 would also have a favorable impact on consumer spending and economic growth.

“We believe that the benefits of the comprehensive tax reform policy will be felt as early as 2018,” Tan said, adding this would support higher economic growth for the country.

“In light of this, we shouldn’t be too pessimistic and take advantage of pullbacks in the stock market to buy stocks,” Tan said.

COL sees the 7,500 to 6,600 PSEi range a good level to do “peso cost averaging” or to pick up core stock holdings regularly at any price. Whenever the PSEi falls below 6,600, Tan said this would be the time to buy aggressively.

Tan’s top stock picks are: First Gen Corp., Meralco and Semirara Mining and Power Corp. for the power sector; Megaworld Corp. for the property sector; Metrobank for the banking sector; Robinsons Retail Holdings Inc. for the consumer sector; and Melco Crown Philippines for the gaming sector.