Stocks at risk of returning to 4,000 levels – analyst

MANILA, Philippines —Is the Philippine stock market in danger of returning to the 4,000 levels last seen at the height of the COVID-19 pandemic?

It is possible, if you ask economist Jonathan Ravelas, especially if current challenges are not addressed.

“That’s the risk. If we will not do what is necessary in addressing food (issues), addressing transport (concerns), then the risk to the downside is there,” he said.

Ravelas, a senior adviser at Reyes Tacandong & Co., said the Philippine Stock Exchange index is currently just moving between the 5,800 and 6,000 levels.

“The problem is, it’s like just marching in place. It just shows that the market has no conviction. So based on the current situation today, the chances are high that it goes down instead of going up,” Ravelas said.

Ravelas said policy credibility needs to be restored, noting that markets hate uncertainty more than bad news.

He said clear and consistent policy direction from fiscal and monetary sides is critical.

Further, Ravelas said inflation must be fought decisively, while the energy problem must be fixed to reduce the country’s exposure to Middle East shocks.

He said investors must also be reassured on policy stability over political noise.

“We’re still hopeful that things will be better, but hope is not a strategy. Preparation is,” Ravelas said.

“That is what we need to be able to do. That is what foreign investors are looking at. How are you addressing all of the current issues? That’s why the risks to the downside in the stock market have not changed. I’m still looking at probably, revisiting the COVID low of 4,000,” he said.