Expect market volatility until year-end – PSE

MANILA, Philippines - The volatility in the local stock market is expected to continue until the end of 2015 but opportunities still abound, according to the head of the Philippine Stock Exchange.

PSE president Hans Sicat said while financial markets are overreacting, investors still have reasons to stay invested in the stock market.

“I think the view that the economy is going to grow by at least 5.5 to six percent (this year) is not too radically different from a six percent expectation. It may be lower but it’s certainly not fatal,” Sicat said.

Sicat believes the markets will eventually calm down.  “Hopefully it will be sooner rather than later,” he said.

First Metro Securities Brokerage Corp., the stockbrokerage arm of tycoon George Ty’s First Metro Investment Corp., advised investors to maximize opportunities in the local stock market even with the prevailing volatility.

Mark Angeles, head of FMIC’s equity research, said investors could take position for opportunities that would arise amidst the volatile environment brought about by slower-than-expected growth, weak corporate earnings, the eventual US Fed rate hike, and economic troubles in China.

“Despite the volatility, which will most likely continue until the end of 2015, we remain optimistic of the Philippine market over the longer term.” Angeles said.

 His recommendation is for investors to rotate to defensive stocks, or stocks that have constant dividends and stable earnings during any economic state.

Angeles also advised investors to go for stocks with high dividend yields and visible positive ratings.

The upcoming campaign and national elections in May next year is another factor to consider in looking for opportunities in this volatile market, Angeles noted.

“We suggest investors to take advantage of the current market weakness by increasing their exposure on stocks that tend to perform better during election season. Historically, expenditure on groceries, liquor, cigarettes, and fuel tend to rise about 12 months prior to elections,” he said.

 FMIC head of institutional sales Mhelvin Abajon, for his part,  said the current market weakness presents an attractive buying opportunity.

Abajon also noted the importance of having a reliable trading platform to take advantage of market opportunities.

First Metro Philippine Equity Exchange-Traded Fund (FMETF) provides opportunities for long-term investing in the stock market.  It is a mutual fund that mirrors the performance of the Philippine Stock Exchange index and trades like a stock in the local bourse.