Stocks seen outperforming fixed-income investments

Riding on corporate and economic recovery starting this year, stocks can outperform fixed income assets in the next few years but investors must also consider investing in equities in selected overseas markets.

This was according to Smith Chua, chief investment officer at BPI Asset Management and Trust Co. (BPI-AMTC), who said during Friday’s launch of the firm’s new podcast platform on Spotify, Wealth Radio, that the main-stock barometer Philippine Stock Exchange index (PSEi) could hit at least 7,600 to as much as 8,000 this year.

This suggests an increase of at least 6.4 percent to as much as 12 percent from last year’s PSEi finish of 7,139.71, in turn seen supported by a rebound in earnings after the heavy beating taken last year when the coronavirus pandemic resulted in an economic recession.

“This year, we will see recovery in earnings and it will not stop this year. We have to anticipate that pent-up demand will also accrue to those corporations here in the next year and the year after. Effectively, for long-term investors there is room for you to invest over time,” Chua said.

“It’s not the timing of the investment. It is the time in investment that is very very important,” he said.

Prospects for recovery will make equities more attractive than fixed income in the next few years as locked-down consumers spend more while the market remains liquid amid accommodative central bank settings, Chua said. He added that an increase in the government’s infrastructure spending and pending bills to cut corporate taxes and liberalize foreign investments would also bring good tidings to the market.

“More importantly, among equities, we want to be exposed outside. The race to vaccination means there will be countries outside that may actually be recovering faster than we could, so their GDP (gross domestic product) will rise faster than ours. Money or interest will shift to those countries,” he said.

To date, foreign funds have been staying out of the local market, but Chua noted that foreign funds had always been very light in their exposure to the local market.

“So with just a little bit of foreign money coming in, the market could go up. We don’t know when and that’s the issue that we have here. We just need to buy when the markets are cheap,” he said.

BPI AMTC’s Wealth Radio podcast is the firm’s way of making the world of investment simple, attainable and fun.

“Investor education is essential in building investor confidence,” said BPI AMTC president Sheila Marie Tan. “Through Wealth Radio, we hope to reach a wider audience and to have an effective reach to anyone who has taken an interest in investing and use that mode to further encourage Filipinos to start an investment journey.”

This is a free and accessible tool for financial education which is likewise a comprehensive library of information on everything about investments, Tan said. The platform seeks to offer updated and quality bite-sized content about investing.

Wealth Radio will feature a curated lineup of topics such as: The Morning View, a daily dose of financial news giving fast facts on the go; Wealth Watchers, a monthly market recap to synergize and strategize growth goals; Investment Jargon Buster, which simplifies and strips down complex investment concepts, and Investment Insights, which offers exclusive interviews with expert speakers and industry champions where listeners can learn secret tricks of the trade in finances.