Investors urged to be cautious, lock in gains

Michelle Ong, ABS-CBN News

Posted at Jun 06 2016 08:27 PM

So it's Monday, the first chance Asian markets get to react to the worse-than-expected US jobs data released after Friday trade. On the one hand -- it could push back the date of the next rate hike from the Federal Reserve -- good for the markets; on the other: it adds to concerns the US economic recovery could be losing momentum.

COL Financial VP & Head of Research April Lee Tan said gauging the market's reaction could be a tricky balancing act.

"It's funny because we're at a point where bad news seems to be good news, but surprisingly, bad news was considered to be bad news and the markets reacted negatively. So it's difficult (to tell), actually.... a lot of balancing act but at the end of the day, nobody knows which factor will have a bigger weight," she said.

Tan said, it would be better if investors also focus on local fundamentals--and the fact that our market is expensive, at 19x Price to earnings ratio. Like many other analysts, Tan recommended investors lock in gains, while they still can.

"We're recommending investors to be a bit cautious. I think it'll be good to lock in gains... based on 1st quarter earnings results, a lot of companies just came out with in-line results --- not a lot of positive surprises."

Tan said, because most blue chips are already expensive, it would be wise to look at small cap stocks like Vista Land and Lifescapes as well as EastWest Bank.

Based on COL Financial estimates: the PSE index finds a strong support at the 6900-7000 level, while resistance is at 7500.