Investors cautioned on PH stocks

By Miguel R. Camus, BusinessMirror

Posted at 09/21/2011 9:36 AM | Updated as of 09/21/2011 9:36 AM

MANILA, Philippines - Philippine stocks are among the most “crowded” in the region on a net foreign-buying basis, a status it shares with close neighbor Indonesia, according to Credit Suisse Group AG.

The Swiss bank cautioned investors in the Philippines in a research note on Tuesday, saying valuations in the local stock market are “stretched” and the country is associated with downgrades to consensus earnings-per-share.

Credit Suisse added the Philippines is the “most exposed” to recent gains in rice prices and that its reliance on overseas workers’ remittances means the economy is not as domestically driven as some investors perceive.

Overseas investors have been net buyers of $1.27 billion of Indonesian equities, and purchasers of a net $475 million of Philippine shares, the report said. The Philippine Stock Exchange benchmark index fell 2.05 percent to 4,219.82 on Tuesday. The measure tracked losses in the rest of the region on Tuesday and on Wall Street the night before.

Jonathan Ravelas, chief market strategist for Banco de Oro Unibank Inc., said the report highlights the risk-averse sentiments around the globe.

“This is more of an emotional market. There is still an over-effect from all that is happening on Wall Street and the Europe debt [crisis]. It highlights that we are not immune to global headwinds,” he said in a phone interview on Tuesday.

The report comes as Standard & Poor’s cut the sovereign credit rating of Italy by a notch, fueling fears that Europe’s debt problems are far from over.

Ravelas reiterated that further dips in the market should be taken as a sign to accumulate Philippine stocks
given stable economic fundamentals in the medium-term. He said reports suggesting the valuations in the Philippines are expensive could be “tactical” or short-term recommendations.

“I would say what we are seeing is more of an adjustment than a warning bell,” he said.

In July emerging-markets investment guru Dr. Mark Mobius called Philippine stocks expensive relative to stocks offered in other developing economies.

Mobius, who heads Templeton Emerging Markets Group, pointed to the Philippine market’s lack of scale and liquidity to attract larger funds.

http://www.abs-cbnnews.com/business/09/21/11/investors-cautioned-ph-stocks