MANILA, Philippines - First Metro Investment Corp. says Philippine shares are not expensive, as some analysts think.
This even as the Philippine Stock Exchange index set five new record highs in the first five trading days of 2013.
First Metro says local share prices are still considered cheap if compared to their potential for earnings.
"Our stock prices are still relatively undervalued as opposed to the capacity of the earnings that a company can make moving forward," Bede Lovell S. Gomez, deputy head of First Metro investment advisory group, said.
"In 1996, 1997, our P/E for the stock market was doing 26 times but our GDP growth by that time was probably only 4-5% and interest rates were 10% and we had inflation running at 9%. But now you're looking at GDP growth moving between 7-8% and looking at high double digit growth of corporate earnings at 18-20% and inflation at 3-4%, so it's a totally different scenario," he added.
First Metro adds foreign funds will continue to flow into the stock market, especially once the Philippines gets a credit rating upgrade.
"The game changer that we are all banking on will be the credit upgrade that hopefully the country will get in the first half that will allow global investment funds to come in. We expect more strong inflows coming in," Juanchito Dispo, president of First Metro Investment Corp., said. - ANC