Stockbroker BDO Securities Corp. expects the local stock market to close the year at the 7,700 level, with an average earnings growth of 15 percent.
The BDO Unibank-affiliated firm said sound research on investing gives an edge over any superstitions associated with the annual “ghost month.”
Generally believed to be an unlucky period to do business, investors tend to take a vacation from their business and even the stock market during this period, which falls between August 16 and September 14 this year, to steer clear of any bad winds that one may encounter.
With many investors in the Philippines having Chinese roots, the local stock market is not spared from the practice.
BDO Securities, however, said “steadfast approach” to investment strategies keeps downsides to a minimum.
“Making investment decisions based on sound research, diversification, and long-term goals are crucial, regardless of the time of the year,” said John Michael Raz, BDO Securities head of online sales.
Raz noted the 30-company Philippine Stock Exchange index has generally exhibited weakness during August, which happens historically 60 percent of the time.
He said instead of getting “scared” from trading at this time, investors should consider the ghost month as an opportunity to go bargain-hunting.
“There’s really no rule against buying in the month of August,” Raz added.
“While historically weak, investors should take it as an opportunity to buy the dips and initiate positions in their favorite stocks. For a lot of investors, they see weakness as an opportunity to even improve their cost,” he said.
In particular, Raz noted financial and power sectors offer opportunities in select conglomerates.
“We suggest investors look at sectors that can sustain earnings growth. We continue to prefer the financials sector on the back of still healthy loan growth and improving lending margins. We are also bullish on the power sector which is seen to benefit from inelastic power demand and higher spot market prices,” he said.
“We also like conglomerates with consumer-centric portfolios that benefit from the country’s economic resilience,” he added.
For Raz, a down or flat market still provides investors with decent returns.
“For active investors who like trading, a flat market offers an opportunity to trade in and out of a well-established range — buying near support and selling at or near resistance. A down market doesn’t mean no opportunities to make decent returns. Rather, you just need to be more selective of the stocks to buy and manage your expectations in terms of returns,” Raz said.
“For investors with a long-term view, our comprehensive research coverage provides up-to-date fair value estimates. This aids our clients in identifying opportunities at bargain prices,” he added.
