PSEi to end the year within 8,700-8,800
Credit to Author: Tyrone Jasper C. Piad| Date: Mon, 06 Jan 2020 16:19:41 +0000
The benchmark Philippine Stock Exchange index (PSEi) is seen to end 2020 within the 8,700-8,800 range on the back of better corporate earnings supported by robust economic growth.
Philstocks Financial Inc. senior research analyst Japhet Tantiangco, in a media briefing on Monday, said that company earnings are anticipated to yield 10- to 15-percent growth this year since the economy has been recovering.
Coupled with stable inflation forecast, Tantiangco said that earnings were expected to be bullish in 2020.
“We are not expecting any wild swings from inflation. This year, we are expecting gradual ascent for inflation,” he said, noting that forecast is pegged within 2.4 percent to 2.8 percent.
But Tantiangco warned that regulatory risks would continue to weigh on investor sentiment due to uncertainties, citing the recent dispute between President Rodrigo Duterte and water concessionaires over franchise agreements.
This has been affecting market appetite, with the local bourse opening the year in the red territory from continued unrest.
Philstocks research head Justino Calaycay said, however, that the spat between the President and the water concessionaries could also fuel further uncertainties as this might pave the way for the review of other agreements as well.
“It is bigger than the water concession problem. It shows how sacred contracts are that the private entities entered into with the government,” he explained.
“There is so much uncertainties… that maybe difficult for the market to grasp,” he added, noting that “long-term positioning may not be attractive.”
External developments, including the trade war between the United States and China, and Brexit, are the still the narratives that investors should look out for, Tantiangco said, adding the recent escalating political tension between US and Iran.
Iran’s Quds Force commander Qassam Soleimani, along with Hashd al-Shaabi militia Kataib Hezbollah leader Abul Mahdi al-Muhandis, was killed in an airstrike ordered by US President Donald Trump at the Baghdad international airport in Iraq on January 3.
Meanwhile, peso is projected to settle within P50.70 to P51.70 while real gross domestic product is seen to record 6.2 percent to 6.6 percent growth this year, Philstocks said.
PSEi ended 2019 at 7,815.26, growing by 4.68 percent year-on-year and 4.35 percent from the first day of trading that year. This was in contrast when it dropped by nearly 12 percent in 2018.
In 2019, the benchmark index traded as high as 8,365.29 on July 15 and as low as 7,475.16 on May 16.