Accumulate stocks ahead of 2024 rally, Maybank Securities tells investors

Philippine Stock Exchange, Bonifacio Global City, Taguig City, Dec 29, 2022. INQUIRER PHOTO / NINO JESUS ORBETA

MANILA  -Investors are expected to warm up to stocks next year on more favorable interest rates and faster economic growth after writing off the market for most of 2023.

Maybank Securities Philippines advised investors to start accumulating blue-chip names on expectations that market sentiments will shift to “a more risk on” attitude in the first quarter of 2024.

Maybank Securities head of equity research Rachelleen Rodriguez said their index target for 2024 was 7,600, which offers a potential upside of more than 20 percent.

“Earnings are projected to rise 9.1 percent year-on-year driven by the conglomerates, banks and property players,” Rodriguez said.

Maybank Securities’ top picks are SM Investments Corp. (target price P1,290); BDO Unibank (P170), Jollibee Foods Corp. (P288); Globe Telecom (P2,470); Bloomberry Resorts Corp. (P17.50); and GT Capital Holding (P1,020).

It noted that conglomerates offered attractive opportunities for investors given their diversified holdings spanning banking, retail and property.

The property sector is projected to grow revenues and net income by 16 percent and 18 percent, respectively, according to the brokerage house.

“Growth will continue to be led by the mall segment, supporting our thesis that landlords will outperform developers. SM Prime Holdings (SMPH) is our top pick in the sector,” Rodriguez said.

It assigned a neutral outlook on consumer firms and banks, among the top performers in 2023, with the latter likely to be impacted by “weak” loan growth prospectus.

“Our preference would be banks with strong pricing power, robust consumer lending outlook and healthy non-performing loan buffers. BDO and BPI [Bank of the Philippine Islands] are our top picks,” Rodriguez said.

Maybank Securities’ assumptions were also based on the Philippine economy growing by a projected 6.5 percent in 2024—the fastest among Asean-6 markets, referring to

Malaysia, Singapore, Thailand, Indonesia, Vietnam and the Philippines.

“The improvement would be attributed to a pick-up in domestic demand in [second half] 2024 when we anticipate the Bangko Sentral ng Pilipinas (BSP) to embark on monetary policy easing in [third quarter] 2024 to reduce the policy interest rate by 75 [basis points] from +6.5 percent this year to +5.75 percent by end of 2024,” said Dr. Zamros Dzulkafli, economist at Maybank Investment Banking Group.

Despite the recent downtrend in inflation, Zamros said elevated consumer prices could persist in 2024.

“The onset of El Niño and export ban on rice and other food items will push up food prices, and we continue to monitor the risk of higher transportation costs and crude oil prices amid the Middle East conflict,” he said.