More retail investors are bullish on the stock market and are looking to add income-paying investments in the next three to six months as the Philippine Stock Exchange index (PSEi) is expected to hit the 7,100-point level this year, according to an online stockbroker.

“Philippine stocks could finally enter a bull market this year as the outlook for economic growth looks bright, and as stocks are cheap and underowned,” COL Financial chief equity strategist April Lynn Tan said in a media briefing Monday.

She said lower inflation and interest rates will spur consumer and investment spending, while higher government spending in 2024 compared to last year should be “very good for economic growth.”

Tan said the major risk facing local stocks is contagion coming from the possibility that the United States would suffer from a hard landing or recession and a bear market.

However, she said the Philippines is more resilient to global economic slowdown.

“The Philippines is not dependent on exports as consumer spending accounts for over 70 percent of GDP (gross domestic product),” Tan said, adding that remittances and business process outsourcing (BPO) revenues are historically resilient to global recessions.

Due to this risk, Tan recommended investors to focus on more defensive stocks which are more resilient to economic downturns and those that provide income through cash dividends.

“It would also be wise for investors to keep some cash so they can capitalize on opportunities to buy stocks at even cheaper prices in case they are sold down indiscriminately because of contagion,” she added.

Tan said the base case PSEi target of 7,100 this year hinges on the 2024 earnings per share growth forecast of 10 percent.

“The bottom-up index target is 8,200, much more bullish. We are positive, or even if I’m like a little bit cautious in short term, I’m still positive over the long term because my feeling is if the market sentiment improves, everything normalizes. We can easily reach 9,400 because the market is already cheap right now. So those are positive scenarios,” she said.

The PSEi closed at 6,450.04 points on the last trading day of 2023.

COL Investment Management president Marvin Fausto cited results of their investor survey, indicating that majority of them will be adding Philippine stocks and income-paying investments.

Fausto said about 59 percent of retail investors are now optimistic on their Philippine stock portfolio in the next six months.

He added they are most bullish on real estate investment trusts, property, and power. (PNA)