‘PSEi to finish within 8,600-8,900 level’
Credit to Author: Tyrone Jasper C. Piad| Date: Tue, 14 Jan 2020 16:19:26 +0000
HIGHER corporate earnings and strong macroeconomic fundamentals would propel the main index to end the year within the 8,600-8,900 level, First Metro Investment Corp. (FMIC) said.
In a briefing on Tuesday, FMIC Vice President Cristina Ulang gave a bullish outlook for the Philippine Stock Exchange index (PSEi), projecting a price earnings ratio of 16.8x to 17.4x and earnings-per-share growth of 10.7 percent this year.
“We see momentum in the recent corporate earnings report [for] third quarter which brokers estimate have reached 13 percent [to] 15 percent [growth], depending on the equity universe that they follow. We expect that momentum to continue this year,” she explained.
The investment banking arm of the Metrobank group forecast a minimum of 10-percent corporate earnings growth this year on the back of robust macroeconomic environment.
This is being supported by low interest rates, stable inflation, infrastructure spending, overseas Filipino workers’ remittances and upbeat tourism sector, among others, she said.
FMIC Executive Vice President Daniel Camacho, meanwhile, expressed optimism on increased activities in the local stock exchange this year.
“We’re hopeful that the Philippine equity markets will gain stronger momentum in 2020 with strong macroeconomic fundamentals and following key drivers,” Camacho said, citing real estate investment trusts (REITs) issuance among them.
The rules and guidelines on REITs are expected to be released this year, the Securities and Exchange Commission (SEC) earlier said, after a decade of discussion on key terms.
So far, regulators have approved the tax-free transfer of assets, reduction of minimum public ownership to 33 percent and participation of insurance firms and pre-need companies.
REITs are alternative investment options apart from preferred shares and bonds.
Short-selling activities, Camacho said, could also “spur trading activity in the stock market.”
SEC approved the implementing guidelines for short selling last January 2. Short selling allows an investor to borrow a security — which he or she views as “being overpriced and anticipates that its price will go down” — for sale, SEC explained. Investors will then buy the shares back when prices go down, allowing the borrower to earn profit.
“We [also] continue to work with several potential new issuers, looking to make their equity market debut in the second half of the year,” Camacho added.
Amid upbeat outlook, Ulang warned that the trade war between the United States and China, tax reform uncertainties and oil prices, among others, would continue to weigh on the local bourse this year.
PSEi ended 2019 at 7,815.26, growing by 4.68 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.