AN official of a stock-trading firm said that the local bourse is poised to go up further between 8,000 and 9,000 points in 2014.
BPI Securities Chief Executive and Managing Director Michaelangelo Oyson gave two catchphrases for that: “Boom na boom” and “It’s more fun in investing in the Philippines.”
He added that the Philippines offers “more investment opportunities” than the rest of the world today, and is in the “middle of the economic supercycle.”
While the Philippine Stock Exchange index (PSEi) is playing within 6,400-point mark, Oyson told reporters that the index may go up to 7,000 points between October and the yearend.
Oyson cited a few factors that would boost the PSE: foreign funds deciding the medium-term outlook of the market in the following months; China determining profitability of commodity companies; and India’s handling of the rupee, which will influence Philippine peso’s depreciation or appreciation.
He added that BPI Securities is seeing a $2-billion fund flow into the country through foreign investors in the next months until the yearend.
“We have very strong gross of national reserves and it is still growing. The government is very healthy. And the banks are very healthy, which means there is going to be continued liquidity in the market especially today when banks are crumbling to look for opportunities to lend out,” Oyson said.
“I’m not surprised if we’re going to hit 8,000 or 9,000 [points]by next year. But the Philippine market is not fully re-rated, which means that investors would be willing to pay much higher multiple for the Philippines . . . There is still long way to go for the market, provided that there are no major external shocks,” he explained, referring to the projected rise of the market in 2014.
Oyson said that even if Philippine equities are expensive at 19 times based on price-to-earnings (PE) ratio, the country still offers stocks that is still has a low PE when compared to China and Indonesia, where the peaks were 31 times and 35 times, respectively. He forecasted that investors will still be willing to put more multiples into the market to re-rate their companies, which would result in a 19 times to 20 times PE by next year.
“There would be more companies coming in the local market to take advantage of the low PE multiples,” he said.
On the other hand, consumer company investments will drive the market growth at present, with the likes of Universal Robina Corp. and Jollibee Foods Corp. But Oyson said that these consumer companies are now very expensive.
“For investors who are very patient, who are willing to set aside funds, should start looking at power companies,” Oyson said, referring to the potential growth of power companies’ stocks by mid-2014 to 2015.
“In 2015, there would be a power shortage in the Philippines. And that time, there will be a spotlight in the power companies . . . they are very cheap and are giving high dividend at present,” he added, referring to power companies such under Aboitiz and Manila Electric Co.
He also explained that market investors tend to look at company brands before putting their money into them, saying that a good brand always matters in the decision-making of investors.