Hold on to cash, investors urged

MANILA, Philippines  —One of the country’s leading stockbrokerage houses is advising investors to stay liquid and keep cash on hand as US recession fears mount, potentially overcoming strong Philippine economic growth fundamentals bolstered by easing interest rates and inflation.

COL Financial Group chief equity strategist April Lynn Tan said she was less bullish on undervalued Philippine stocks, and that investors should not expect stellar returns given their “base case” 2024 target of 7,100, which implies a 7-percent upside from its current level.

“At this point, there is heightened risk that the United States will suffer from a recession and a bear market and unfortunately in the past, the Philippines has never been able to escape contagion if this happens,” Tan told reporters during a briefing on COL’s outlook for the first semester of 2024.

Economic turmoil

While the United States might avoid a recession because of the upcoming elections, Tan said the odds still favored economic turmoil for the world’s largest economy.

READ: Economists increasingly sure US will avoid recession -NABE survey

“I’m more underweight on stocks and recommend being more positive on cash,” Tan said.

“Being positive on cash is to take advantage of high interest rates and potentially, if the market goes down, to be able to capitalize on opportunities,” she added.

COL chief technical analyst Juanis Barredo held a more positive view of trading stocks but he also advised investors stay liquid to take advantage of market dips.

He said the PSEi has created a base about 5,950 although the next test for the bulls is breaching resistance at 6,700 to trade as high as 7,100-7,500.

READ: Equities: Looking better but it’s still not the time to be greedy

“I am bullish but we are not in a bull market run,” Barredo said, citing volatile conditions and weak market volumes.

“It might take some time before those accelerated moves show,” he said.

Defensive stocks

The COL Financial executives advised investors to choose either defensive stocks plays or those showing a strong uptrend.

READ: After 4-year downturn, stock market recovery seen to come this year

Tan’s top picks were AREIT Inc., Citicore Energy REIT, Aboitiz Power Corp. (target price: P51.80), SM Investments Corp. (P1,161), and Monde Nissin Corp. (P10.80). She also recommended Manila Electric Corp. (Meralco) (P446), Ayala Corp. (P916), GT Capital Holdings (P955), Metropolitan Bank & Trust (P87), Ayala Land (P40.50), Robinsons Land Corp. (P26.20) and PLDT Inc. (P1,720).

Barredo advised investors to buy pullbacks on BDO Unibank Inc., Jollibee Foods Corp., International Container Terminal Services Inc., Meralco and Ayala Land. For Monde, he said investors can accumulate the stock with a cut loss price set at its previous major low.

Meanwhile, COL Investment president and CEO Marvin Fausto said they remain cautiously optimistic and this was reflected in their latest investor sentiment survey showing 59 percent of investors indicating they were more optimistic versus 54 percent during the same period last year.

At the same time, bearish investors increased from 7 percent last year to 9 percent in 2024 while 32 percent were neutral, the survey showed. INQ