Stockbroker COL Financial Group Inc. expects the main index to reach 8,250 points by end-2023 or by early next year, as the Philippine economy continues to grow.
Juanis Barredo, COL’s chief technical analyst, the Philippine Stock Exchange index (PSEi), will initially drop to as low as 6,400 points before going up to the 7,000-point level.
“I think a lot of bullish signals have just recently come out. We’ve seen it break through the downtrend line, we’ve seen it break through the 200-day moving average, we’ve seen it generate the ‘Golden Cross’,” Barredo said during COL’s media briefing on Tuesday.
He said, however, that he is leaning towards the PSEi hitting the 7,500-point level by yearend.
“So accumulate into these pull backs. (We’re seeing) a potentially higher index, something between 7,500 and 8,250.”
Based on the previous year’s performance of the main index, Barredo said the market is weaker during the months of February and March, before going up in the succeeding months starting April.
April Lynn Tan, COL’s chief equity strategist, said there are a lot of “compelling reasons” for the continuous rise of Philippine stocks this year, including tamer inflation.
Lower inflation is expected to prompt the United States Federal Reserve to cut rates, which will be followed by the Bangko Sentral ng Pilipinas. This could lead to the weakening of the dollar against the peso.
Tan said the risks to the market’s performance for the year are the possible hard landing of the US economy and elevated inflation in the Philippines, which could dampen consumer spending.
“And, you know, in the view of investors, the Fed has been successful in controlling inflation. So, of course, inflation won’t just go down steeply, but at least you know, from a peak of 8 percent in 2022, it’s expected to go down to 3.8 percent.”
According to COL’s survey, investors are concerned about a worse-than- expected recession in the US and Europe, and global geopolitical issues. Some 54 percent of those who were surveyed in January, meanwhile, were optimistic on the growth of the PSEi, higher than the 33 percent who were optimistic when they conducted the survey in July last year.
Majority of investors are still planning to increase their stock portfolios, COL said.