[by Rick Daligdig]
Say Hello to August Month! This month is what we called the transition before the so-called “BER” months, of course, we are a little bit excited when these months was approaching. In contrast, August is associated with what we called “ Ghost Month” if we speak about the Stock Exchange, especially the PSEi. Before I forget, a lawmaker filed a bill for those who make Ghosting a habit. Well, this ghosting is in terms of love life.
But sadly this is not my cup of tea, so let’s focus now on how we will navigate your stock and trade journey this month.
A Snapshot to our Economic Landscape.
We are down in the last five months of 2022 and many events…internal or external that brings major changes to our economic landscape.
To name a few, the Ukraine – Russia war, Fuel and commodities price hike, the ongoing COVID 19 Pandemic and the hawkish stance of the US Fed to fight their own inflation affects greatly to the Philippine economy.
Locally we have the Election 2022, PH inflation, Omicron surge in the early months of the year and a weaker peso. Interventions have been made such as giving financial Aid (ayuda) to the affected sectors due to the high cost of oil and fuel. BSP fired off the highest rate hike to date.
Globally due to fresh lockdowns in major economy like China, Oil price in the market goes down, to date, it plays around USD 123-USD 95 which also pushback the pump prices in our gasoline stations. To avert further depreciation of their currency, Global Central Banks around the world also gunned their interest rate hikes in a response to US Fed hike.
The unfortunate side, Phil. Government has limited fiscal space due to high debt to GDP ratio which will make government spending a challenge. The aim of the present economic managers to bring down the debt ratio to 58% in 2028 is a great task.
Market is Cheap?
Philippine Stocks Exchange (PSEi) on Wed close at 6,430.08 , 1.06% higher than previous days close. Luckily, PSEi is 15% better than the Stock Exchange of US and EU.
In Asia, Philippine index was second to last. Analysts said that the market is still cheap because they are trading below their historical value. They advise to take advantage of this while prices are down. Do not wait for the bottom price as our market is very volatile.
Treat the Ghost Month as an opportune time.
Our fundamentals remain intact. In fact, selling activity during August is not driven by any material deterioration of fundamentals but rather structural selling pressure. If you’re an investor or trader in the stock market some of these points maybe can help in your decision on which stocks will you go with.
REITs stocks to perform better – especially the office cater REITs due to loosening of our mobility and economic activities.
Defensive stocks to outperform – you can vouch your investment in power, Telco’s and consumer staples
Take profits – this is to avoid you from being lock up especially on the stock that is very volatile and you will wait to go up the price again. Wise investors need to know when they will take the profits or the reverse, cut their losses.
Start peso cost averaging on other stocks – in doing this you can consider this parameters
a. Larger cap
b. Dividend paying
c. Strong balance sheet
On more specific note, Stock Analysts recommend the following stock for long term investment.
Ayala Corp (AC), SM, GTCAP – for Holding Co.
Banco de Oro (BDO), Metrobank (MBT) – for banks
Ayala Land Inc. (ALI), Robinson Land Corp. (RLC) – for property
D & L Industries (DNL) , Puregold (PGOLD) – for consumer
Let us be reminded that not all of the past August performance saw a decline. We as investors or traders must equipped ourselves; learn the dynamics of stock exchange. We must have a certain percentage of how much your investment earns so that we are guided, same as how much are we willing to lose. Remember being an investor must be a risk taker and be mindful that in every decision we made you must be ready for its outcome. Invest smartly!