PH stocks expected to roar back to life this year

This 2022 is an opportune time for investors to buy on dips as the stock market, which is on the early stage of a bull cycle, will benefit from higher corporate earnings amid the reopening of the domestic economy, according to leading online stock brokerage COL Financial.

COL sees the main-share Philippine Stock Exchange index (PSEi) ending this year at 8,400, gaining 1,277.37 points or around 18 percent from last year’s finish, supported by a 21-percent growth in average earnings per share.

At a press briefing on Monday, COL chief equities strategist April Lee-Tan said it would not be good to be overly cautious about the COVID-19 pandemic, the uptick in global inflation or even the upcoming May presidential elections.

Top picks

Tan’s top stock picks for the first half are PLDT, Filinvest REIT, RL Commercial REIT, MREIT, Ayala Corp., GT Capital, Metro Pacific, BDO, BPI, Metrobank, Ayala Land, Robinsons Land, Megaworld, Aboitiz Power, D&L Industries and Puregold.

Given the substantial increase in local vaccination rates, at least in the National Capital Region, Tan said Filipinos were now learning to deal with COVID-19, as reflected by the V-shaped recovery in the fourth quarter gross domestic product, which grew by 7.7 percent year-on-year.

The introduction of affordable medicine and the possibility of COVID-19 mutating to something milder were the other factors why the virus that has disrupted the world for more than two years could eventually become endemic, she said.

The elections, meanwhile, could turn out to become a “nonevent,” she said. It was still early to speculate on who would become president as front-runners in the past eventually lost the race, she added.

“I think what’s important is that we have a clean and honest election where people will actually accept the outcome that there is no cheating, that it is the will of the people,” she said, adding that the nation would also look forward to the candidates’ economic policies.

Election gains

Beginning the time of President Fidel V. Ramos, the stock market would always be up by a median of 8.1 percent three months before the elections, 8.1 percent three months after and 0.7 percent six months after. Except during the time of President Joseph Estrada, when the impact of the Asian currency crisis peaked, the market had actually gained shortly before and after every election, she said.

“It’s also dangerous to be too cautious about inflation, because, first of all, the reopening of core economies globally should address the supply chain issues that were created because of the pandemic,” Tan said. In the United States, she said the surge in inflation had been driven by strong demand.

Juan Barredo, chief technical strategist at COL, said: “We continue to remain in a rally wave. I still think this very, very long trend you see here is still a wave one (out of the five waves in Elliot Wave analysis) … But we’ve hit our next resistance points, and this is the reason why we’re consolidating here at about 7,475.”

He said the PSEi would need to break 7,800 to 8,250.

Support for the market is seen at 6,950, and then at around 6,600. If broken, the scenario could become bearish, he said. INQ