PSEi may rise up to 8,250 this year

MANILA, Philippines — The Philippine stock market is seen going up this year amid cooling inflation and as foreign funds start looking into emerging markets like the Philippines again.

COL Financial expects the benchmark Philippine Stock Exchange Composite index (PSEi) to hit between 7,500 and 8,250.

April Lynn Tan, chief equity strategist, said there are compelling reasons why Philippine stocks should continue to go up this year with the PSEi generally trending higher since September 2022.

“The biggest factor that could boost the market is the fact that inflation is on the way down and as a result, the US Federal Reserve and the Bangko Sentral ng Pilipinas are expected to cut rates,” she said.

Tan said emerging markets including the Philippines would likely see the return of foreign funds this year because of relatively stronger fundamentals, cheaper valuations in these markets, the general underinvestment by foreign investors and China’s reopening and along with it, the expectations of more stimulus.

She said foreign investors are heavily underweight in Philippine stocks with cumulative net foreign buying over the past 10 years – which reached as high as P300 billion in early 2015.

Possible risks include disappointing economic growth performance for the Philippines and if the US Fed does not cut rates and if the bear market in the US continues, Tan said.

Juanis Barredo, COL Financial’s chief technical analyst, said that if the PSEi can establish a strong base, a recovery toward 7,500 to 8,250 “may be in the ballpark for 2023.”

PSEi could be following its December to January 2020 rally path, he said. If so, the January rally will be reconfiguring into a corrective consolidation as it did in 2020.

Resistance for the PSEi stands first at 7,100 to 7,200 then 7,400 to 7,500.

“The PSEi has seen a viable bottom and is now moving on its first major rally,” Barredo said.

“We may need to prepare for some corrective (but temporary) maneuvering soon. There is still a chance though that the rally could extend perhaps until mid-February which may be a good reason to stay fairly positioned,” he added.