Philippine Stock Market Research

January 3, 2017

2016 Recap 2017 Outlook

Our Special Report this week is our Year-ender and Outlook Report.  The PSEi was the second-worst performer in 2016 among 18 emerging and developed markets we cover.  This may have been the toll of its high PER and the shift of funds to the US in 2H16.  The Philippines, however, is second to India in GDP growth.  The Philippines’ GNI growth has also been accelerating for the past four quarters now.  There may be efforts to cool down this fast-growing economy as seen in its yield curve which somewhat flattened in 4Q16.  The US’ yield curve, on the other hand, reflects recovery, while China’s point towards a slowdown.

Our recommended 2016 Stock Portfolio generated a 20.4% return beating the PSEi, ASI and Philippine mutual funds’ 2016 returns.  Please see their performances below.  The 2016 Stock Portfolio was made late January when our four indicators showed a market bottom.  They are composed of ten mid to blue chip high cash dividend yield, low PEG and fundamentally-sound stocks.  One stock generated a loss but was greatly offset by the other nine.  Six generated double-digit returns ranging 10-57%.  They were a foodco, two propertycos, a power conglo, waterco and powerco.  Despite the PSEi and ASI’s drop in 2H16, the 2016 Stock Portfolio held well and just declined a bit.

To recall, global indices dropped after the US Fed raised interest rates for the first time in December 2015 since the 2008 global financial crisis.  The PSEi rallied from February to July on a generally peaceful campaigning and election period to a high of 8,118.  US interest rate hike fears dampened the PSEi in 2H16 to the 6,000 level.

2017 looks more challenging as the economy comes right after an election year.  There are potentially three more rate hikes from the US and the protectionist policies of president-elect Trump may trump BPOs, exports and the peso.  Guidance has been given to our clients for the market in 2017, and though dim-looking, opportunities abound especially on timing and the quality of stocks to invest in for minimal risks and maximum profits.

2016-stock-portfolio-vs-psei

2016-stock-portfolio-vs-asi

2016-mutual-funds-performance

Disclaimer

This report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.  Pictures in this report cannot be copied or redistributed and are owned by Corpecon Research.