ONLINE stockbroker Colfinancial.com said investors should be ready to lock in gains as the US Fed starts its much-awaited rate cuts.

The stockbroker in an investors note said the US Fed is expected to cut rates by 25 basis points when it meets on September 17 to 18.

“We would like to reiterate our view that despite the positive implications of lower interest rates, we expect the market to go down first as the upcoming rate cut is largely anticipated,” it said.

“As such, active investors should take advantage of the market’s current strength to lock in gains and to wait for pull backs before buying back stocks,” it added.

Colfinancial.com in July said while the rate cut is expected to raise stock prices, investors face a possible “volatility risk” due to the lag between the rate cut and its eventual impact on the economy.

Rate cuts aren’t automatically good for the stock market, said April Tan, Colfinancial chief equity strategist.

Tan, however, said investors should stay invested in the stock market, given the relatively cheap valuation of the local stock market.

“Because in general, if you look at the valuations of the stock market, they’re really so cheap. And then time is going to be your friend because accumulating these stocks at very cheap prices will actually be beneficial over the long term when you go back to mean reversion, meaning stocks will relate back to historical average valuations, which is 16x PE — we’re currently doing 10x,” Tan earlier said.

Late last week, the Philippine Stock Exchange index (PSEi) managed to keep its level at above 7,000, its resistance level, at 7,022.85.

Japhet Tantiangco, analyst at Philstocks Financial Inc., said the market may continue to test the validity of its breach of the 7,000 level as the US Fed meeting takes place.

“A policy rate cut by the Fed together with hints of further easing moving forward is expected to fuel optimism at the local front since this would give the Bangko Sentral ng Pilipinas more room to ease their policy too,” he said.

“The local currency’s strengthening against the dollar, if it continues next week, is also expected to help the local bourse. Investors may also watch out for our upcoming OFW cash remittance data for clues on the local economy,” Tantiangco added.