Stock Picking In Times Of High Inflation Philippines

Stock Picking In Times Of High Inflation in the Philippines:

Inflation concerns persist however, stock market investors are advised now to no longer be disheartened by this scenario. Inflation gradually slowed to 6.3% in August from around 6.4% in July due to oil prices and increases in food prices. Inflation has now averaged at around 4.9% year-to-date and BDO Securities is expecting it to settle at 5.3% for this fiscal year assuming inflation will peak this quarter.

However, the Philippines as a food and energy importer remains vulnerable to inflation risks given its status. According to Abigail Chiw, BDO Securities Head of Research “ The Philippines’ inflation basket is more sensitive to food and energy commodities (coal, oil,r ice). While commodity price trends have eased down as of late (due to the slow global growth concerns), we think domestic factors such as tight food supply are set to become the primary drivers of our inflation going forward.”

Read: 85 Thrifty “Tipid” Tips to Survive Inflation in the Philippines

BDO Securities shares that while elevated inflation remains the key factors for equities and earnings growth — as it erodes Filipinos’ disposable incomes, investors’ risk appetite and overall business sentiment – investors can see stocks with strong balance sheets and business models.

“Investors can look into stocks that offer services and products with enduring demand and cost pass-through structure as these are positioned better to manage inflation headwinds,” shared Chiw. Cost pass-through is described as what happens when a certain business changes the price of the products or services it sells as an effect of the cost of producing them.

“Given this uncertain macroeconomic backdrop, we suggest savvy investors to consider quality names in property, consumer, conglomerates, and banks or sectors which we expect to still gain benefit from their positive reopening dynamics that offer healthy growth of earnings at reasonable valuations. Several of these names are also trading at below book value (deep discounts) and are good value recovery strategies, in our view,” she explained.

For the consumer sector, Chiw said investors can look into at Robinsons Retail, Puregold and D&L Industries; while Metrobank, BPI, and Security Bank are decent choices for the financial sector.
Megaworld, Robinsons Land, and Ayala Land, are the stock picks within the property sector, while Alliance Global, GT Capital, and SM Investments are some strong bets among the conglomerates.

BDO Securities is a full-service, multi-product securities distribution platform, and a wholly-owned subsidiary of BDO Unibank’s investments banking arm of BDO Capital & Investment Corporation. It covers numerous domestic equity funds that are actively traded in the stock market and has a solid equity research offering, with its expert analysts regularly making insightful “buy” and “sell” calls. The company has been declared the Best Retail Broker in the Philippines at the recently held 15th Annual Alpha Southeast Asia Best Financial Institution Awards 2021.

About BDO Securities:

BDO Securities is a multi-product brokerage firm, and a wholly-owned subsidiary of BDO Unibank’s investments banking arm of BDO Capital & Investment Corporation.

BDO Securities has posted a 3-year CAGR of 38.68% in terms of total trade volume, and 25.52% in total client base, solidifying its position as among the top trading platforms in the Philippine Stock Exchange (PSE). Its objective is to empower and encourage its customers to have access to the best-in-class products and services, timely and relevant investment research and market findingsthat will help them make informed and sound decisions on their trading and investment needs.

About BDO Unibank, Inc.

BDO is a full-service bank that provides a wide range of retail and corporate services such as traditional loans and deposit products, trust banking, investment banking, treasury, private banking, rural banking, cash management, remittances, insurances, cash cards, credit cards, and online and non-online brokerage services.

BDO has created the country’s largest distribution network, with around 1,500 consolidated operating branches and more than 4,500 ATMs nationwide. It also has 16 international offices (including full-service branches in Singapore and Hong Kong) in Asia, North America, Europe, and the Middle East. The Bank also offers a wide range of edigital banking solutions to make banking transactions easier, faster, and more secure for its clients.

BDO has ranked as the largest bank in terms of total assets, deposits, loans and trust funds under management based on published statements of condition as of March 31, 2022. For more information, please visit www.bdo.com.ph. BDO is regulated by the BSP with contact number (+632) 8708-7087 and with email add consumeraffairs@bsp.gov.ph, and webchat at www.bsp.gov.ph. For concerns, please visit the nearest BDO branch or contact us through our 24/7 hotline (+632) 8631-8000 or email us via callcenter@bdo.com.ph.

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