The Philippine Stock Exchange index (PSEi) could still recover to the 7,000 level, analysts said, citing expectations for strong earnings in the last two quarters of the year.
After reaching as low as 6,000 last month, trading could still improve if inflation could ease by the end of the year, they added.
On Wednesday, the PSEi went down by 7.79 points or 0.12% to end at 6,298.20.
Year to date, the index declined by 268.19 points or 4.08% from its 6,566.39 finish on Dec. 29, 2022.
The PSEi could end at 7,200 by the end of the year as economic and earnings growth is expected to continue, China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.
“We see value in many stocks across industries as many are trading at valuations below their historical averages despite the outlook for sustained earnings growth,” he said.
“We also hope to see more net foreign buying after a long period of consecutive daily net foreign selling [from] August to September,” he added.
Domestic market sentiment could also improve if inflation slows down despite upside risks, as well as less hawkish stances from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), Mr. Mercado said.
A positive outlook for third-quarter earnings could also boost the PSEi, he added.
Sectors that could continue to drive the PSEi are banking, consumer, and power due to elevated interest rates and still-high inflation, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“The index has potential to recover towards the 7,000 level should the macroeconomic picture improve,” he said.
However, recovering to the 7,000 level by yearend could be difficult as inflation has yet to reach the BSP’s 2-4% target, and interest rates are likely to remain elevated in the long term, BDO Capital President Eduardo V. Francisco told BusinessWorld on Sept. 20.
“If inflation goes down and is managed with the rice [price] caps, and also GDP (gross domestic product) kicks up because the government steps up its spending, [the PSEi could go up] 4%, because some are projecting just 3%. Then at least that will keep the stock market index above 6,000. It’s the general economic sentiment,” he said in a mix of English and Filipino. — Aaron Michael C. Sy