Philippine Fund Managers Expect Stock Swings to Continue for Now

(Bloomberg) -- The big recent swings in Philippine’s stock market may continue through March amid a resurgence in Covid-19 cases, investors say.

The Philippine Stock Exchange Index surged 1.9% to close above 7,140 Monday, erasing the previous week’s 1.6% slide. The market lacks clear direction after closing 2021 little changed, and investors remain on edge amid record-high daily infections and renewed movement restrictions.

“Whenever we go into lockdown investors sell down,” said Fritz Ocampo, who helps manage 1.2 trillion pesos ($23 billion) as chief investment officer at BDO Unibank Inc. “The pullback could extend as long as cases haven’t peaked. It will be a volatile first quarter.”

Other risks for local equities include aggressive global tapering of monetary and fiscal stimulus, sooner-than-expected interest rate increases by the U.S. Federal Reserve and the Philippine presidential elections in May, Ocampo said. He thinks the the nation’s key stock index could fall to 6,700 or lower in the first quarter, and favors defensive stocks including telecommunications and port operators. 

Robert Ramos, who helps manage 130 billion pesos as head of the trust and investments group at Rizal Commercial Banking Corp., said he’s “looking for opportunities” amid the recent pullback. Investors should look for dip-buying chances in shares that will benefit when the economic reopening gets back on track, including telecommunications, property and non-discretionary consumer names, Ramos said.

Both Ocampo and Ramos are optimistic that the latest virus surge will be contained, opening the door for further economic reopening that will push stocks higher during the year. Ocampo forecasts the main index will climb to 7,800, while Ramos expects the gauge to end 2022 between 7,500 and 8,000.

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