MANILA, Philippines – Financial services company AB Capital is advising stock-market investors to do “strategical buying” in the coming week, noting that Philippine stocks look expensive right now.
In the company’s weekly report posted on its website, equities analyst Gregg Adrian R. Ilag noted that that the Philippine Stock Exchange Index (PSEI) is valued at 17.72 times earnings, higher than the four-year average at 13.29 times.
But given the excess market liquidity in the system, “we think that pullbacks will be limited even with the market's expensiveness,” he said.
For this week, AB Capital sees the PSEI consolidating in a small range between 4,897 and 5,044 with momentum indicators “still showing a bearish divergence implying a change in the trend for the near term.”
Ilag’s picks for the week include First Philippine Holdings (FPH) Inc. and nickel miner Marcventures Holdings Inc.
“We think FPH is a value story,” he said, noting that the holdings firm is a “cheaper way” owning several energy companies like Manila Electric Co., First Gen Corp. and Energy Development Corp.
Ilag also described Marcventures as a “value story.”
“It is significantly undervalued relative to its regional comps,” he said.
For the coming week, AB Capital told investors to watch out for the release of several economic indicators, including inflation in the United States and economic sentiment in Germany.
The PSEI closed the week down 0.71% to 4,980.71 . The broader All-Share Index was also down 0.29% week on week to 3,350.
AB Capital noted that foreigners were still net buyers for the week despite fears over the eurozone debt crisis, China's hard landing and geopolitical tensions in the Middle East.