MANILA, Philippines - Analysts have warned that the continuous rally of the PSE have made share prices expensive and that the market could fall anytime.
But Wilson Sy's Wealth Holdings and Philequity outlined a number of reasons why the market's bull run will continue:
1. Central banks have vowed to do 'whatever it takes' to boost their economies, flooding the world with cash while cutting interest rates;
2. Bonds are not making money anymore, stock markets are;
3. Money stuck in bonds from the last bull run in fixed income are only now starting to flow into stocks; and
4. The Philippine economy is that attractive, with average corporate earnings of 20% driven mostly by domestic demand.
Sy says if you haven't taken the plunge yet, you should buy now.
"If you're not in, look at your asset allocation, you should have part of your portfolio in stocks... There might be corrections, we don't know when the corrections will occur but definitely the direction is up. Whether you come in now or later, it's a matter of timing, that's where technicals come in. But as far as the direction is concerned, we are very confident we will be seeing higher level," Sy said.
Miguel Agarao, investment analyst at Wealth, says there are still risks, including possible external shocks from the still recovering economies of the United States and Europe.
But their forecast of the bull run lasting for at least another two years shows they are concerned with President Aquino stepping down in 2016.
"Hopefully the one who succeeds him will continue the same policies of growth and stability... What is important is the structural change and the fiscal policies are in play. So long as these improve and we remain in that macroeconomic sweet spot, this bull market for two years and even much longer than that.
This is why Wealth suggests you get in on the action now. They recommend blue chips or companies that are part of the 30-member PSE index. They see the PSEi hitting 7,200 to 7,500 this 2013.