The benchmark Philippine Stock Exchange index (PSEi) is projected to reach 7,100 points by year-end, according to First Metro Investment Corp. (FMIC), the investment banking arm of the Metrobank Group.
The said projection was down from January’s year-end prediction of 8,100 points for the PSEi.
Cristina Ulang, research head at FMIC, said the forecast was downgraded as “there’s so much headwinds” that had “dramatically changed the picture.”
“We need another financial education now to be able to weather the very tricky, volatile market,” Ulang said during a virtual briefing on Wednesday.
“We’ve gone from a period of great moderation like a prepandemic, we had GDP growth of 6 percent and low interest rates…the pandemic. We even had lower interest rates, the BSP [Bangko Sentral ng Pilipinas] was supporting the economy, among others.”
The PSEi closed on Wednesday at 6,255.37 points, 94.57 points lower than the previous close.
Last February, the PSEi reached a high of 7,502 points and but it steadily dropped between 11 to 12 percent, with trading nearly reaching the bear market territory of 6,000 points.
“Early in the year we were predicting 8,100 for the PSEi but suddenly we have the Ukraine (war) where and no one has foreseen the Ukraine war happening February. That was when the market began adjusting and digesting a lot of news that are really hard to price in,” she said.
Ulang said factors that would drive the market upward include the new government’s pronouncement of the continuation of policy reforms, economic expansion, infrastructure rollout, and market-friendly reform measures.
Earnings per share growth in the equities market is seen to hit 10 percent and hit 17 times of price-to-earnings ratio.
In the capital markets, corporate bond issuances in the first half have already exceeded last year’s full year volume. With the current interest rate environment, corporate bond issuances could slowdown in the second half of the year, FMIC said.
Image credits: Nonie Reyes