And now we look at the local market. The PSEi continues to weaken and has broken through the key support level of 7,000, marching towards the 2016 low of 6,500. We can expect the PSEi to remain this way, primarily being driven by developments in the US market for the next two weeks. Developments overseas will be strong enough that we do not see any positive domestic news to counter this bearishness possibly for the remainder of October.
The big events coming up for us further in the fourth quarter are (1) Third quarter earnings season (2) more economic data during the first two weeks of November and the visit of Chinese President Xi Jinping. These developments may provide something to cheer about for the Philippine markets to at least allow foreign investors to reconsider bringing back their risk exposure to the Philippines.
But for now we still see day 31 of foreign selling. We remain defensive on our funds, with a lookout to companies with strong fundamentals and compelling value propositions with the recent sell-offs. Nevertheless, Goldilocks may be around the corner at these 15x PE levels.
What to do in times like these?
Taking into consideration the recent events, PAMI views this as a great opportunity to start investing in the long-term by investing in equity-laced funds such as the PAMI Equity Index Fund (PEIF) or the Philam Strategic Growth Fund (PSGF).