More investors are confident of a rebound in the equities market this year, according to a survey by online stockbroker COL Financial Group Inc.
Marvin Fausto, COL investment management president, said the stockbroker’s quarterly survey of investors show a continuing increase in optimism since the first quarter of last year.
“Less and less people are now pessimistic,” Fausto said.
This develops despite investor apprehension over a potential escalation of geopolitical tensions and a resurgence of inflation.
“We’ve seen that inflation has been on the downtrend, but (investors are) worried that El Nino and other risks could come into play. Maybe geopolitical wars as well may also affect inflation,” he said.
April Lynn Tan, COL chief equity strategist said local stocks may finally enter a bull market this year as the outlook for economic growth improves, with stocks being cheap and under-owned.
Tan said inflation and interest rates may have already peaked, potentially spurring consumer and investment spending in a reversal from last year. According to her, government spending is seen at a faster pace this year to help boost growth.
COL projects the benchmark PSEi hitting between 7,100 and 7,500, with the base scenario assuming an earnings per share growth of 10 percent.
“However, the major risk facing local stocks is contagion coming from the possibility that the US would suffer from a hard landing or recession and a bear market. When recessions and bear markets happened in the past, the Philippines always suffered from contagion,” Tan said.
She advised investors to focus on more defensive stocks which are more resilient to economic downturns and stocks that provide income through cash dividends while pooling a war chest for ready deployment when opportunities for bargain hunting arise.
“It would be wise for investors to keep some cash so they can capitalize on opportunities to buy stocks at even cheaper prices in case they are sold down indiscriminately because of contagion,” Tan said.
