The Philippine Stock Exchange Index (PSEi) is expected to reach the 7,000 to 7,500 level this year, driven by improving investor sentiment, investment company First Metro Investment Corp. (FMIC) said on Thursday.
“Our forecast is (that the PSEi will hit) 7,000 to 7,500 level this year, and that is supported by earnings per share growth of 11%,” said FMIC Head of Research Cristina S. Ulang during a media briefing in Makati City.
Ms. Ulang added that the price-to-earnings range for the PSEi will be from 12.6x to 13.6x.
FMIC projects that the PSEi is set to recover this year, supported by “improving investor sentiment and easing equity risk premium arising from declining inflation and interest rates, and resilient double-digit corporate earnings.”
On Thursday, the bellwether Philippine Stock Exchange Index (PSEi) improved by 67.62 points or 1.03% to close at 6,613.73, while the broader all shares climbed by 26.12 points or 0.75% to end at 3,495.76.
The PSEi ended the last trading day of 2023 at 6,450.04, down by 69.07 points or 1.06%.
According to Ms. Ulang, some risks that could hamper the growth of the local bourse include geopolitical tensions, the El Niño phenomenon, inflation, slower growth in China, elections, and a sharp slowdown in global growth.
She said that cuts in policy rates could influence whether the market reaches the 7,500 level or not.
“If the rate cuts come sooner than expected, then that’s going to cheer the market and going to enliven the risk-taking. But if it gets postponed and creates a lot of uncertainty, then it may be a struggle for the market to reach 7,500 level,” Ms. Ulang said.
“If we’re going to have a resurgent inflation, then it’s going to delay the rate cutting and that’s going to disappoint the market,” she added.
Meanwhile, FMIC Executive Vice President and Investment Banking Head Daniel D. Camacho said the local bourse could see initial public offerings (IPOs) by the second half of the year.
“It’s a matter of if the market is right. It’s a matter of timing. Most likely, it would be the second half. But we’re confident that total overall market volume and the number of equity issuances will definitely exceed last year’s,” Mr. Camacho said.
The PSE is expecting six IPOs this year, with the first one being the PHP 12.9 billion debut share sale of Saavedra-led Citicore Renewable Energy Corp. in March.
FMIC, the investment banking arm of the Metropolitan Bank & Trust Co. (Metrobank) group, offers various products and services such as debt and equity underwriting, loan syndication, project finance, financial advisory, government securities and corporate debt trading, equity brokering, asset management, and research. — Revin Mikhael D. Ochave