THE current bull run in local stocks may last for another 12 to 18 months, depending on who will replace President Benigno Aquino 3rd in 2016 and whether the incoming administration will boost investor confidence.
In a briefing on Thursday night, BPI Securities Corp. chief executive officer and managing director Michaelangelo Oyson said that the market’s positive run will last for “12 to 18 months depending on the president next in line.”
“The market will this year will be driven by liquidity — international foreign fund flows. But the presidential election is dictating the PE (price to earnings) multiple of the market. In the past five years there was confidence in President Aquino that foreign funds are coming to the country. To a certain extent, yes, [the president did great]if you look at the stock market,” Oyson said.
“The market in 2016 will depend on the next president in line. The next president must not tinker with government policies. If we continue the good economic climate, then we will see a take-off,” he added.
Consensus on the Philippine Stock Exchange index (PSEi) this year ranges from 7,800 points to 8,500 points by end-2015. But Oyson said BPI is sticking to its forecast of 7,886 points by yearend.
“We still target 7,886 points to 8,000. Fair value of the index is at 7,800. Yes, the market may go as high as 8,400 points by the middle of the year, but then go back down afterwards,” he said.
He attributes this trend to factors affecting the market such as the presidential election campaign kicking off midyear, foreign fund flows and liquidity affected by a possible interest rate hike by the US Federal Reserve, volatility on the global scene, and the overall sentiment of domestic and foreign investors.
“The Philippine market is really following the trend of foreign investors. We need foreign flows to move this market to 8,000,” Oyson said.
Ninth all-time high
On Friday, the PSEi recorded its ninth all-time high closing at 7,728.18 points on a rebound in US stocks and positive corporate earnings results, with Universal Robina Corp (URC) taking the spotlight after reporting solid profits.
The main index rose 0.70 percent or 53.94 points to 7,728.18, while the wider All Shares index went up 0.58 percent or 25.75 points to 4,496.74.
The 7,728.18 all-time closing high beat the previous record close of 7,716.06 on Wednesday, February 4. The all-time intraday high is still untouched at 7,738.12, also recorded on Wednesday.
BPI analysts at the same event also said that among the sectors, the consumer, power, property, gaming, and media-related stocks are poised to “outperform” this year, while the sectors classified as “underperformers” include telecommunications and banking.
Oyson said these are the stocks that investors should buy this year: DMCI Holdings Inc., Bloomberry Resorts Corp., Universal Robina Corp., SM Investments Corp., JG Summit Holdings Inc., Megaworld Corp., Ayala Land Inc., and Manila Electric Company for the index stocks.
For non-index stocks, Oyson said Max’s Group Inc. would be good along with Robinsons Retail Holdings Inc., D&L Industries Inc., SSI Group Inc., and Vista Land and Lifescapes Inc.
To complete the list of high-yielding stocks for the year, he said his stock picks include Philippine Long Distance Telephone Co., Globe Telecom Inc., Aboitiz Power Corp., Aboitiz Equity Ventures Inc., Nickel Asia Corp., and Trans-Asia Oil and Energy Development Corp.