THE Philippine stock market is set to benefit from the region’s projected equity market outperformance, as Asia paints a rosy picture for investments in 2018.
In a news briefing on Wednesday, executives of global bank HSBC said investors are expected to “pivot to Asia” this year, with the bank’s models indicating a potential 13-percent earnings growth in equity returns in Asia-except Japan.
Locally, meanwhile, HSBC Head of Investment Strategy in Asia Chuek Wan Fan told reporters on January 17 that the local equity market is expected to post an earnings growth of 11.5 percent for this year, as driven by the consumption and banking sector.
Despite their expectation of a slightly lower earnings growth for this year as compared to the regional average, HSBC said prospects remain rosy for the local economy, particularly for the banking sector in the Philippines.
The strong expectation on the banking sector’s performance this year is pegged on the assumption that the Bangko Sentral ng Pilipinas (BSP) will raise rates this year to preemptively address issues in the local economy, as well as to ride with the global trend of higher rates this year.
Fan said once the BSP delivers a rate hike, the local banks net interest market is expected to improve and will sway a positive sentiment on the banking industry on the investors’ standpoint.
The bank maintains a “neutral” stance for the Philippine market for 2018. “We have a neutral view on Philippine equities as high remittances and strong investments support robust economic growth and strong investments support robust economic growth and steady earnings performance,” Fan said.
“This helps mitigate risk of the high valuations of the Philippine stock market,” she added.
HSBC projects a 6.7-percent growth for the Philippines this year, significantly above the regional average projection of 6 percent for 2018.
For 2019, HSBC officials said they see the local economy expanding at a rate of 6.8 percent, also above the regional average projection of 6.2 percent.