MANILA — Online stockbroker Philstocks Financial Inc. projects the Philippine Stock Exchange index (PSEi) to rise as high as 8,500 level by the end of the year, citing lower inflation and stronger peso as catalysts that could provide support for local equities.
Philstocks Financial Research Head Justino Calaycay Jr. pointed out the country’s inflation has been declining continuously within the government’s target range.
“If it maintains that direction, the trend, then we might see more consistent consumer spending which is good for retailers, businesses. This will increase business activities so that should contribute to economic growth and that should reflect on share prices,” he said in an interview Friday.
Calaycay expects stronger earnings in the coming months after getting a boost from election-related spending in the second quarter.
“In terms of political stability, business predictability, if that can be guaranteed that there are no unnecessary (situations) or whatever that might reverse (the trend), then I think those are perfect ingredients for the market to go above 8,500,” he added.
Philstocks Financial Senior Research Analyst Japhet Louis Tantiangco also cited the stronger peso, which is projected to average against the US dollar at 52 to 53 for the year.
“We will have a strong peso at least until the third quarter of 2019 and with the strong peso, foreign investors would be enticed to park funds in the local market,” he said in a press briefing.
Tantiangco added they also expect corporate earnings growing by 10 to 15 percent this year which should support the PSEi’s foray towards 8,500 level.
He said the loose monetary and fiscal policy can drive aggregate spending, which in turn will boost corporate margin.
Tantiangco further said year-end target for the PSEi assumes a price-to-earnings (PE) ratio of 19.45 times.
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