Retail investors more bullish on PSE stocks

Philippine Stock Exchange, Bonifacio Global City. INQUIRER PHOTO/LYN RILLON

Stock market investors are turning more bullish and the majority still plan to increase their holdings as prices rallied to a nine-month high, a new survey conducted by the country’s biggest online stockbrokerage firm showed.

COL Financial Group said 54 percent of clients were “bullish” over the next six months, with 19 percent showing more conviction with a “strong bull” view.

This compares with the previous survey taken last July, which showed 33 percent with a bullish view, of which 9 percent held a strong bull view.

The majority of investors in the previous survey were neutral to bearish, meaning they were expecting the downtrend to continue.

Instead, the Philippines beat expectations by recording its fastest economic expansion in over 40 years after the growth in the gross domestic product in 2022 jumped to 7.6 percent despite surging inflation and aggressive interest rate hikes.

The benchmark Philippine Stock Exchange index has also rallied over 20 percent since its October 2022 low, entering a technical “bull market” on Jan. 13. It has since consolidated above 7,000—a level unseen since April last year.

“It goes to show how strong the market is and the good news is there are compelling reasons why our market is up,” April Lynn Tan, chief equity strategist of COL Financial, said during a briefing on Friday.

She cited expectations that domestic inflation will trend lower and relatively inexpensive stock prices. On the other hand, risks include the possibility the US Federal Reserve will keep interest rates elevated and the US economy entering a recession, which could hurt growth of developing economies.

COL Financial research head Charles Ang also noted that optimism was usually robust at the start of the year.

Similar surveys from COL Financial in the first half of 2022 and 2021 showed majority bullish views of 65 percent and 53 percent, respectively, before falling sharply in the latter part of those years.

“It seems we are following this trend but it remains to be seen how the remaining part of the year would fare,” Ang said.

The COL Financial survey showed that 61 percent of clients were planning to increase their stock market exposure in the next three to six months.

This was lower than the 71 percent of investors who said they would do so in the previous survey, suggesting many were also were ready to secure profits.

Indeed, the new survey also showed 34 percent planned to cut their holdings in the next three to six months compared 29 percent in the middle of 2022.

“There is still a lot of cautiousness in the market today despite [the rally] in the the last few weeks,” Ang said.

Investors were currently most bullish on the power (56 percent), banking (54 percent), and consumer (53 percent) sectors and most bearish on property (19 percent), real estate investment trusts (14 percent), and telecommunications (10 percent), according to the latest COL Financial survey.