PSEi expected to top 7,000 this year

THE BENCHMARK Philippine Stock Exchange index (PSEi) could top the 7,000 mark this year due to optimism over the country’s good economic fundamentals and market liquidity, officials of two brokerages said separately.

“Despite PSEi’s seemingly unattractive valuations, we think there is room for prices to go up. We think rally can continue because of ample liquidity and improving risk appetite,” April Lynn L. Tan, COL Financial Group, Inc. assistant vice-president and research head, told reporters at the brokerage’s 2013 financial briefing in Edsa Shangri-La hotel in Mandaluyong City yesterday.

“We see the market hitting 7,400 within the year.”

An official of another brokerage gave a similar outlook last Tuesday. Wilson L. Sy, director of Wealth Securities, Inc., said in an interview at the sidelines of the Wealth Securities, Inc. 2013 Investor Forum at The PSE Centre in Pasig City that “7,200-7,500 is our target. Consumer-related sectors will be in play.”

The bourse has been on a prolonged rally, with the 30-stock bellwether index breaching the 6,600 level last Tuesday. PSEi notched its 19th record high this year at 6,648.57 yesterday. Year-to-date, the market is already up 14.38% from its close of 5,812.73 on Dec. 28 last year.

Prices at the bourse are now widely seen as too steep, but resilient consumer spending growth, election-related spending, investment opportunities, a liquid financial system, and improving state finances are factors that should keep investors in the market, Ms. Tan said.

“The Philippines has a positive long-term outlook and boasts of relatively attractive fundamentals globally. Interest rates will also most likely remain low for the rest of the year, sustaining the prevailing liquidity-driven rally,” she noted.

Corrections, however, should be expected before market peaks, especially due to continued global uncertainties in the West and China, Mr. Sy said.

“There will be correction, but not really too deep, maybe (down to) 6,100-6,200 — that should be enough of a correction — before the first half ends in order to bring valuations down,” Juanis G. Barredo, COL Financial chief technical analyst, said in yesterday’s briefing.

Ms. Tan said investors should “stay invested in the stock market to take advantage of its favorable long-term outlook.”

“However, it would be wise to set aside some cash as volatility could create opportunities to buy stocks cheaply,” she said. — Franz Jonathan G. de la Fuente
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