Becoming less bearish: Investing in equities in 2024

For some time now, we have been mainly overweight on fixed income and underweight on equities.

That has proven beneficial to us as most of our fixed income is up 6%, while equities are down 3% for this year so far. But some things are changing – does this mean you should start investing in equities in 2024?

We see several things happening. Moving forward, we expect bond yields to move lower, and they have indeed moved lower significantly since the start of November. Recall that the 10-year yield was close to 7%, and now it is just at 6.15%. Even the 20-year yield or the 15-year yield is trading at 6.25%.

If this continues, and the US Federal Reserve adopts that dovish outlook, the Bangko Sentral ng Pilipinas (BSP) may mirror this view. And if you look at the fundamentals, inflation is easing and slowly dragging global stocks upward, which is good news.

Stock market forecast: Opportunities to rally

There may indeed be some room for equities to rally, both global and local, just on the back of this shift to a more dovish stance in monetary policy outlook.

In the Philippines, offshore funds on a year-to-date basis continue to sell their Philippine exposure. In November, however, we have seen some trickling in of foreign buying given that local equities have become very cheap relative to their underlying value after the October sell-off.

Recently, some consumer companies, over the past seven days, have rallied. Universal Robina Corp. (URC), Monde Nissin, and Jollibee Foods Corporation (JFC) are just some of them. There is good news coming from real estate companies as well. The reclamation project in Manila Bay has finally been given the green light.

Turning a bit bullish

All this begs the question: Should I invest in equities for 2024?

While we still want to be overweight on fixed income, being overly cautious about equities is no longer necessary. We are seeing more and more reasons to start to accumulate local equity positions, especially near the 6,000 index level.

(Reach out to your relationship manager or investment specialist if you wish to recalibrate your strategy and portfolio. Boomark and visit Metrobank Wealth Insights, www.wealthinsights.ph, daily for more insights and ideas.)