'Best buying chance in a generation'

THE ONGOING global financial meltdown has presented investors with "the best buying opportunity in a generation," according to stock market watchers, although they warned that the coming rebound would not be for those with weak stomachs.

According to CitisecOnline president Conrado Bate, the potential returns that the present market environment provides is a rare chance for those who are brave enough to start buying stocks.

"We will not see an opportunity like this again in our lifetime," he told a forum in Makati City, sponsored by the Mutual Fund Management Company of the Philippines. "Maybe our children would see one again, but probably not us."

A stock market veteran, Bate urged would-be investors to consider the fact that stocks traded on the Philippine Stock Exchange had survived--and even flourished--after going through worst times.

As far as the Philippine economy and business environment are concerned, he said the ongoing turmoil was not as bad as that caused by the 1997 East Asian financial crisis, although he conceded there were parallels that could be exploited by investors.

"The average prices on the [local stock] market are now as cheap as they were in 1997, but the economy is a lot better," the Citisec chief noted.

The benchmark PSE index has so far dropped by 53 percent since the start of the year, mainly in sympathy to the global market turmoil, as foreign and local investors shift their funds to more defensive asset classes like bonds, money market placements and even cash.

Bate cautioned, however, against complacency or even outright optimism, pointing to historical data that showed how stock prices had gyrated wildly during bear markets.

He predicted that prices of local stocks would soon find a temporary bottom and stage a sharp rally that would last for about seven months, based on the experience of past recoveries.

Once this is exhausted, the "harsh economic realities" that companies are finding it harder to do business will set in, causing investors' optimism to evaporate, Bate said.

At this point, prices will go lower although at a slower pace for a few months before the real stock market bottom is formed.

Despite the gut-turning gyrations of late, Bate said stocks remained the best bet for investors over the long term,compared to any other asset class.

"Over the last 17 years, stocks have risen by an average of 19 percent each year, including bear market periods," he said.

In the same forum, ATR-KimEng economist and research head Luz Lorenzo explained that the Philippine economy is more resilient in the face of the global financial crisis than it was in 1997.

In particular, she pointed to the country's foreign debt profile which, she said, has been managed by the government prudently since then.

"The fiscal sector is still a concern, but it is a lot better now," she added. "While the latest [budget] deficit number is bigger than what it was [in the same period] last year, it is still at less than 1 percent of GDP (gross domestic product, or the total value of local economic output)."

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