Stock investors seen to take more risks in 2024

Investors are on the lookout for opportunities to buy stocks next year amid expectations of easing inflation and favorable interest rates, analysts said.

“We are bullish on the local equity market’s prospects next year given the prevailing outlook for a continued easing in inflation, and rate cut prospects,” Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said in an e-mail interview.

“These should help boost risk appetite amongst investors, improving trade liquidity and fund flows,” he added.

Toby Allan C. Arce, head of sales at Globalinks Securities and Stocks, Inc. said that investors are anticipated to show increased interest in stocks next year, driven by “favorable interest rates” and “accelerated economic growth.”

“This positive shift follows a period of skepticism throughout much of 2023 when investors had largely dismissed the market,” Mr. Arce said. “Anticipated is a shift in market sentiment towards a more risk-on attitude during the initial quarter of 2024.”

The Bangko Sentral ng Pilipinas recently kept its policy rate steady at a 16-year high of 6.5% for a second straight meeting.

From May 2022 to October 2023, the central bank raised borrowing costs by a cumulative 450 basis points to tame inflation.

Headline inflation cooled to 4.1% in November amid easing prices of food as well as restaurant and accommodation services, data from the Philippine Statistics Authority showed.

The November figure is slower than the 4.9% in October and 8% in November 2022. However, this was still above the BSP’s 2-4% target for the 20^th straight month.

Analysts said the Philippine Stock Exchange index (PSEi) could still surge to the 7,000 level on major catalysts for economic growth.

“With respect to the index, our initial target is at 7,100, based on conservative valuations amid expectations of modest earnings growth of just under 10%,” Mr. Mercado said.

“There are reasons to be optimistic about the equity market next year, and I see a reasonable chance that the index will reach the 7,000 level,” Juan Paolo C. Colet, vice-president of AB Capital Securities, Inc. said in a Viber message.

According to Mr. Colet, the three potential major drivers of better market performance next year are a dovish shift in monetary policy, higher economic growth, and the implementation of capital market reforms.

The Philippine economy expanded by 5.9% for the third quarter, faster than 4.3% in the second quarter but slower than 7.7% a year earlier.

The expansion in the third quarter also ended three consecutive quarters of slowing growth.

“As always, there are risks. Among those we should watch out for are a hawkish monetary policy overshoot that stuns economic growth; a failure by China to shore up the world’s second-largest economy; and geopolitical flareups or natural calamities that severely destabilize supply chains and financial markets,” Mr. Colet said. — By Sheldeen Joy Talavera, Reporter