BIG Philippine money managers are cautiously plowing back money into the nation’s equities, seeing cheapened valuations as an opportunity they have been waiting for, although the market has yet to bottom out.

The Philippine Stock Exchange index climbed 10% last week, the most since 2009 and briefly entering what’s defined as bull territory on Friday, when gains from an eight-year low extended to 22%. The surge came as the nation unleashed monetary stimulus and fiscal spending packages of P775 billion ($15.2 billion) to avert a potential recession. The benchmark sank 2.6% on Monday, extending this year’s slump to more than 34%, one of the worst in the world.

The companies in the Philippine index now trade about 10 times earnings estimated in the next year, near the lowest level since 2009, data compiled by Bloomberg show. BDO Unibank, Inc., the biggest local private fund manager that has $20 billion in assets, favors companies that benefit from the epidemic and those that will quickly bounce back once the economy normalizes such as banks.

“This is the mega sale we have been waiting for,” said Fritz Ocampo, who manages $20 billion as chief investment officer at BDO. “Long-term investors look at this as a good time to accumulate their favored stocks. While infections will still rise, the market is now more forward looking after steps taken by the government.”

While the market’s recovery indicates a return of some confidence, fear remains high as the spread of the coronavirus continues and its economic toll has yet to be quantified, according to BDO, and PhilEquity Fund, one of the nation’s oldest mutual funds.

“We could reach levels that technically qualify as a bull market, but it’s hard to say we have already hit bottom,” Mr. Ocampo said. “Business and consumer confidence haven’t been restored yet, while the real economy is still struggling.”

Amid the caution, Mr. Ocampo likes telecom stocks on expectation that data demand is picking up as people stay home, and retailers that benefit from continued purchases of basic goods and will further gain when consumer demand recovers once the outbreak is contained.

Local buyers are driving the market’s rebound from its recent low as foreigners have been selling Philippine shares at the fastest pace since 1999, when Bloomberg began tracking the data. Except for two sessions, overseas funds pulled out money every day this month, bringing this year’s withdrawals to over $633 million.

“Those willing to overlook bad economic numbers in the short term are slowly coming in,” said Wilson Sy, a fund manager and founder of PhilEquity Fund, which started in 1994.

Mr. Sy favors the biggest companies in the index. “Some are anticipating a V-shaped recovery when the stimulus kicks in. The drop was sharp and quick so the bounce is bound to be the same.” — Bloomberg