ATR Asset Management Inc. (ATRAM) said current market valuations make it attractive for investors to start positioning their stocks holdings.
The asset manager said equities valuation will continue to be supported by sequential improvement in inflation trajectory and strong corporate earnings.
“To recall, first quarter earnings growth for the Philippine Stock Exchange index (PSEi) was at 27 percent, which is in line with our 2023 forecast of 17 percent. Indications from our corporate channel checks suggest sustained solid performance in the second quarter,” it said.
“While domestic news may continue to be encouraging, the market performance may still be driven by the developments on the overseas front. The uncertainties on growth prospects in the developed markets and China is causing investors to remain on the sideways. Foreign investors continue to be wary about the currency risk amidst the fiscal and current account deficits and potential tightening interest rate differential if the BSP (Bangko Sentral ng Pilipinas) doesn’t mirror policy rate hikes of the Fed,” ATRAM added.
ATRAM noted that the PSEi continues to trade at very attractive levels of 12x price-to-earnings ratio.
“While it may take time for foreign flows to come back, the current risk-reward proposition of the market warrants starting to position already and taking advantage of the current levels,” it said.
“We continue to favor high-quality but deep-value names that can weather an uncertain operating environment like this and benefit under the sustained recovery of the economy,” it added.
