PSEi up on bargain hunting, stocks undervalued

Manila, Philippines – Stocks rose on Monday just enough to hold the main index’s wobbly 6,000-support intact, but with the successive selloffs the past weeks, Philippine shares pale in comparison with their peers in terms of valuation.

The Philippine Stock Exchange index (PSEi) gained less than a percent (0.24 percent) to settle at 6,052.33.

“The local market rose as investors hunted for bargains following last week’s decline,” Japhet Tantiangco, research manager at PhilStocks Financial, said in a note.

Falling bond yields made stocks more attractive, he added. That’s after the central bank cut interest rates by a quarter-of-a-percentage point last Thursday.

“The PSEi opened the week in positive territory despite persistent trade uncertainties between the US and China that weighed on global markets,” Luis Limlingan, managing director at Regina Capital, said in a note.

“The index’s resilience was likely driven by bargain hunting, while investor sentiment was further lifted by the appreciation of the Philippine peso against the US dollar,” he added.

Still, trading was anemic with net value turnover at P4.38 billion “reflecting weak market confidence,” PhilStocks said.

UNDERVALUED

But the local bourse remains bearish.

“The market is still on a downtrend as corruption issues and the Peso’s weakening continue to weigh,” Tantiangco said.

The Philippine stock market, with a price-to-earnings ratio of 10.1x, is “undervalued” and “has the lowest PE ratio among peers,” according to PhilStocks’ estimates.

“This is below its 5-year historical average of 17.3x and the regional average of 18.6x,” Tantiangco said.

That ratio, often called the price or earnings multiple, is one of the ways to compare a company’s valuation against its historical performance, other firms in the industry and overall market.

“Chartwise, as mentioned, the local market is still deemed on a downtrend with a major resistance at 6,150 followed by the 50-day exponential moving average. Currently, the market is testing its 10-day exponential moving average. Major support is seen at 6,000,” Tantiangco said.

NewsWatch Plus business news anchor Lois Calderon contributed to this story.