MANILA - Investors who felt they were left out by the stock market's recent rally still have an opportunity to place their bets, with the market poised to ride on the strong economy, a fund manager said.
The Philippine Stock Exchange Index can advance to 10,000 to 11,000 points, as consumer and banking stocks benefit from higher disposable incomes due to tax reform and the government's infrastructure program, said Sun Life Philippines chief market development officer Michael Manuel.
The main index breached the 9,000-point level for the first time last Friday, extending gains, after the government reported that economic growth in 2017 was within its target.
"The stock market continues to excite me. There's still a lot of leg to get to 10,000, 11,000 just because the economic growth story of the Philippines remains very solid," Manuel told ANC's On the Money.
"The demographic story was there and now factoring in is government being a more active participant in economic growth generation particularly with infrastructure spending," he said.
Investors are betting on the government raising more revenues from tax reform to fund President Rodrigo Duterte's P8-trillion infrastructure program.
Manuel said stocks might appear overvalued compared to corporate earnings growth, but investors should look at them as long-term investments.
"Some people are still betting three years down the road, it's still a good bet to make," he said.
Manuel recommends consumer stocks and banks that are poised to benefit from the infrastructure boom.
Conglomerates Ayala Corp and the SM group are "really good proxies for the economy," he said.
While gains in stocks are currently higher compared to other asset classes such as bonds, Manuel recommends keeping a diverse portfolio that also includes cash and bonds.
Investors should have a goal, Manuel said, as he compared portfolio-building to a forming a puzzle in reverse.
"You know what the picture is and you know the pieces to put in. Once you do it, it becomes apparent that bonds will be there," he said.
"There's always a good mix, as long as the mix gets you to your goal," he said. "It's not always a one-sided bet."