PH among top picks as emerging market stocks

FILE: (Pixabay photo)

MANILA — The local stock market is poised for a new bull run following its strong performance, as investors prefer emerging market (EM) stocks with the Philippines among the frontrunners.

“With high volume and continued defiance of support levels, the breakout confirms the new bull run of the PSEi (Philippine Stock Exchange index),” said analysts of First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in their latest joint report.

FMIC and UA&P noted that foreign fund managers are cautious of overvalued United States (US) stocks and bonds.

“With a Fed rate hike in December appearing more unlikely, investors reverted to a risk-on mode, and geared their sights on the better outlook for emerging markets,” they said.

The report noted foreigners became optimistic as typhoon Harvey hit the US, while relatively weak economic data convinced most market players that a December Fed rate hike “looked unlikely with inflation way below the Fed’s 2-percent target”.

FMIC and UA&P said slightly higher inflation both locally and abroad is also likely to happen due to the disruption caused in the petroleum products supply chain abroad.

“Top Philippine firms should continue to post slightly above-average earnings in third quarter to sustain the upward trend,” analysts added.

The report further said foreign investors’ optimism fuelled the PSEi’s gain, as they turned into buyers to an amount of P33 billion in July to September quarter, buoyed by the P29-billion inflow in September alone.

This drove PSEi to a new all-time high of 8,294.14 on Sept. 18. Year-to-date (YTD), PSEi has provided a 19.1-percent return, snatching the second spot from Korea Composite Stock Price Index or KOSPI. (PNA)