PSEi forecast to hit 7,500 by year-end

MANILA, Philippines — The Philippines Stock Exchange index (PSEi) is projected to reach a range of 7,300 to 7,500 this year, according to First Metro Investment Corp. (FMIC).

In a briefing, FMIC, the investment banking arm of the Metrobank Group, said this would be supported by robust earnings per share (EPS) growth of 13 percent to 15 percent and a price-to-earnings (PE) ratio between 13.5x and 14x.

This anticipated rally will be fueled by expected interest rate cuts from both the Federal Reserve and the Bangko Sentral ng Pilipinas as inflation subsides, FMIC said.

FMIC head of research Cristina Ulang said the market is awaiting the return of liquidity to be influenced by buoyant corporate earnings, weakness of the dollar and foreign investors’ diversification to emerging markets as they exercise caution versus US equities.

Factors that affected share prices in the first half of the year were low leverage and balance sheet strength; low volatility; increasing value; and high or steady growth momentum or high profitability, Ulang also said.

For next year, FMIC said investors can anticipate a “promising landscape in 2024 with the return of initial public offerings and REITs, offering potential investment opportunities.”

This is from a combination of lower interest rates and good equity values resulting from strong corporate earnings growth, providing upward momentum to the PSEi.

In preparation for 2024, the second half of the year presents a favorable buying opportunity and accumulating assets in preparation for a significant recovery toward year-end and the first quarter of the following year, said Daniel Camacho, head of FMIC’s Investment Banking Group.

FMIC affirmed the strength of the Philippine economy amid persistent global uncertainty and volatility.

Jose Patricio Dumlao, president of FMIC, said that despite the challenging environment the Philippine economy has demonstrated remarkable resilience.

“In the first quarter of this year, we achieved robust growth of 6.4 percent, outperforming our peers in the region. This is a testament to the strength of the country’s macroeconomic fundamentals. We continue to be optimistic and we believe that the GDP will expand by 6.1 percent this year, as we expect strong domestic demand to remain a key driver of growth. This positive momentum will be supported by prudent fiscal management, heightened infrastructure spending, and enhanced business and consumer confidence,” Dumlao said.

FMIC also noted that consumer spending increased by 6.3 percent year-on-year, driven by higher employment rate. Employment level for April and May (year-on-year) registered above five percent and unemployment rate continues to fall, further reinforcing the expectation of elevated consumer spending.

In terms of infrastructure spending, FMIC said a 12.1 percent increase in the budget of the Department of Public Works and Highways will ensure continuation of major infrastructure projects across the country.