By James A. Loyola While local stocks are already at very attractive levels after falling for months, there is still no certainty that it has already hit bottom and ready to rally on the back of strong economic fundamentals. In a press briefing, COL Financial Chief Equity Strategist April Lynn Tan noted that, while other emerging markets appear to be recovering, the Philippines market is decoupling and continues to trek downwards due to negative local factors. “While our fundamentals are ‘too robust to ignore,’ we are facing certain issues that are hurting foreign investor sentiment. These include heightened regulatory and environmental uncertainties and growing irrelevance of the Philippine market in the emerging market basket,” said Tan. She explained that heightened regulatory risk is primarily due to government’s moves against water concessionaires together with recent threats to go after other government contracts held by top conglomerates. On the other hand, among the positives for the local stock market include the recovery of economic growth starting in the third quarter last year, higher consumer spending due to low inflation and lower unemployment, and higher government spending with the timely passage of the 2020 budget. Also on the positive side is the expectation of more monetary policy easing, faster corporate earnings growth, cheap valuations and the improving global economic outlook. Tan said though that, while risks are significant, they will eventually be resolved and, combined with the positive factors, may spur a rally of local stocks with the Philippine Stock Exchange index rising back to 8,400 and up to 9,000 in its best case scenario. “We are confident that the Philippines will eventually overcome these issues and as such, continue to recommend investors to buy Philippine stocks. However, because we don’t know when and at what level the Philippine market will bottom, we would like to stress the importance of risk management, which can be achieved through diversification and proper asset allocation,” she said.