Experts tell investors: It is a good time to buy more stocks
Now is a good time to accumulate stocks despite the continued volatility in the stock market, said experts from stockbrokerage company COL Financial.
Based on their research, the stocks are not falling into a bear market condition, said April Tan, COL Financial vice president and head of research.
“What we’re seeing today is just a major correction, not a bear market and the reason why we are saying that is because none of the problems that we saw in the past two bear markets are present today,” she said, citing several bear market conditions in the past, including the Asian financial crisis in 1997 and the global financial crisis in 2007.
BEAR MARKET
A bear market is a prolonged period where investment prices fall accompanied by widespread pessimism while a correction is a short period of falling stock prices followed immediately by a rise in their prices.
Tan also advised investors to be more prudent in their stock investments and use the peso-cost averaging method in their stock investments, which is buying stocks a little at a time over a period of time.
Tan encouraged investors to begin accumulating stocks, and focus on quality, larger capitalized and actively traded stocks because these are expected to lead market recovery.
She also advised investors to also look into buying equity funds, which are diversified and have high return over a long period of time.
Tan said she recommended that investors use the peso-averaging method because analysts believe that the market won’t recover right away despite the country seeing low of the correction of the market.
BULLISH
She also said that while the Philippines may be experiencing volatility at the moment, the country will eventually “bounce back” and stay bullish in the long-term.
“So this time around, we’re not seeing any symptoms of the Asian Financial crisis. We’re not seeing any overheating,” Tan said.
COL looked at the inflation rate as an indicator for overheating. So far, inflation in the Philippines is only 0.8 percent, which is nowhere near the inflation rates recorded during the past bear market conditions.
Factors that have caused the major correction include worry over the devaluation of the yuan and the weakness of the Chinese economy, slow gross domestic product growth and corporate profit growth in the Philippines, and contagion from sell-offs in Asian stocks.
However, Tan said that the downshift of the Chinese economy is not likely to greatly effect other economies around the world, including the Philippine economy.
The country remains to have good fundamentals, and its markets will still continue to go up after the correction, Tan said.
She added that this is buffered by a growing population and resilient consumer spending growth. From 2015 to 2055, the country will see a 48 percent increase in the size of the working population, which may possibly spur a GDP growth of 7 percent per annum.
She also cited the increased remittances of the OFW sector and the growth of the BPO sector and the country benefiting from growth investments which are being driven by high levels of capacity utilization and infrastructure bottlenecks.
Public-private partnerships are also picking up, with $12.1 billion worth of projects in the billing stage.
These PPPs, when started and completed, will generate jobs and increase the economy’s productivity.
COL Fund Source
During the investment forum, COL Financial Fund expert Marvin Fausto introduced COL Financial’s Fund Source.
The recently launched fund source is a “one-stop-shop” for investors, with as many as 24 mutual funds to choose from, all situated in one platform.
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