Citiseconline says stock market gaining momentum

MANILA, Philippines - With the threat of rising inflation and interest rates hanging over markets overseas, coupled with a global capital flight to less risky assets, the local stock market is expected to run through its corrective phase before it builds a new platform for the next upward swing, according to leading online brokerage Citiseconline.

Citiseconline president Conrado Bate said they maintain a bullish outlook despite the headwinds the market is facing.

Juanis G. Barredo, chief technical analyst at Citiseconline, said the stock market, coming off from a high base last year, is managing through its corrective dance and is expected to bounce back in the second half of the year. He expects the main index to end at 4,300 to 4,600 this year.

Barredo said the market is looking for its next major support column which could be between the 3,800 and 3,600 level as investors move into recovering countries like the United States, Europe and North Asia.

He said volatility will likely remain for now but these corrections will eventually build into the next supportive platforms until the time is ripe for the next upward swing. “Geopolitical tremors and political concerns may take its toll into the short-term but these are but momentary lapses in the grand upward cycle of bullish phases,” Barredo said.

Stocks across almost all market segments took a knock since the start of the year, hitting year-lows.

April Lee Tan, research head at Citiseconline, said the expected strength of the peso would partly mitigate the impact of rising commodity prices. She also pointed out that the economic outlook of the Philippines remains superior to that of developed markets.

Tan said the country is seen to benefit from an investment driven economic boom with the government expected to launch $2.4 billion worth of Public-Private Partnership (PPP) projects this year.

She said funding should not be an issue as banks are in an excellent position to lend while interest from the private sector is expected to be strong given the significant improvement in investor confidence following a peaceful and orderly presidential elections.

Tan also pointed out that the main index PSEi is trading at a very attractive level of only 13.8 times this year’s price earnings ratio, which is below its historical average of 15.8 times.

“Today’s market is a buyers market as poor sentiment will provide the patient investor an opportunity to buy stocks with strong earnings growth outlook at a cheap price,” Tan said.

Among Citiseconline’s stock picks include banking giants Metrobank, BPI, Banco de Oro, property firms Ayala Land and Megaworld and other growth plays including DMCI, Semirara, Nickel Asia, ICTSI, Alliance Global Group and Energy Development Corp.