LOCAL stocks will likely mount a major upswing in 2024 on the back of expected improvements in inflation and interest rates as well as increased government spending, a COL Financial Group Inc. senior official said on Monday.

"Philippine stocks could finally enter a bull market this year as the outlook for economic growth looks bright and as stocks are cheap and under-owned," April Lynn Tan told reporters.

This year's base target for the Philippine Stock Exchange index is 7,100, Tan said, adding that the projection was based on the brokerage's 2024 earnings per share growth forecast of 10 percent.

This is within the 7,000-7,500 index target of First Metro Investment Corp. and lower than the 7,600 expectation of Maybank Securities Philippines.

The COL Financial executive, meanwhile, added that the bullish target was between 8,200 and 9,400 while the bearish case could be 4,300-5,800.

Inflation and interest rates, which peaked in 2023, will likely slow this year and these could "spur consumer and investment spending," Tan said.

Government spending is also projected to surge "more rapidly" in 2024, she said, adding that the country is a domestically driven economy that is resilient to a global economic slowdown.

"However, the major risk facing local stocks is contagion, coming from the possibility that the US would suffer from a hard landing or recession and a bear market. When recessions and bear markets happened in the past, the Philippines always suffered from contagion."

Given the said risk, Tan advised 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.

Read The Rest at :