Filipinos urged to invest in stock market; PHL bourse not in a bubble

Philippine Stock Exchange

MANILA — Filipinos are encouraged to continue investing their money into the local stock market amid higher share prices.

Andrew Stotz, an award-winning equity analyst with more than 20 years of experience in Asia, said the Philippine stock market is now trading at a price-to-earnings (P/E) ratio of 20 times as corporate earnings are doing well.

Stotz said the local bourse’s valuation level is higher compared to other Asian bourses like Taiwan, Korea and Hong Kong, China which are trading at a P/E ratio of between 10 and 15 times.

P/E ratio, an equity valuation multiple, is defined as market price per share divided by annual earnings per share.

“The Philippine stock market is not in a bubble. Sometimes we see a (market) valuation goes up, but it is not a bubble. The fundamentals supporting companies (growth) are still very strong,” he told reporters in a briefing.

Stotz is visiting the Philippines to conduct a seminar on his upcoming book “You Won’t Get Rich in the Stock Market Until You Change the Way You Think about It.”

“The stock market is the only place that people can invest in the business…We have to get a return in the market,” he said.

The equity analyst advised prospective investors to own about 10 stocks as well as bonds to reduce investment risks.

“Put a lot of money in the stock market every year,” Stotz said, estimating that about 20 percent of one’s income can be invested in stocks and bonds.

Stotz said people should start investing early, continue putting in their money regularly, and keep investment portfolio for a long time in order to reap long-term benefits.

Further, he said prospective investors need to ensure that they have the interest, knowledge and time to manage their portfolios to succeed in the stock market.