COL Financial sets 7,100 level as base projection for PSEi in 2024

ONLINE stock brokerage firm COL Financial Group, Inc. has set the 7,100 level as its base projection for the country’s main index in 2024, driven by strong economic growth projections.

COL Financial also expects the stock market to reach levels between 8,200 and 9,400, COL Financial Chief Equity Strategist April Lynn Lee-Tan said during a media briefing on Monday.

However, the Philippine Stock Exchange index (PSEi) could drop to 5,800 and go as low as 4,300 if the market is affected by risks, she noted.

“At a base case scenario, the target is 7,100. Where does that come from? Because we’re forecasting a 10% earnings per share (EPS) growth for this year. So most likely it is 7,100,” Ms. Tan said.

“There is a very positive narrative for Philippine stocks that would seem to imply that a bull market is underway this year,” she added.

According to Ms. Tan, the PSEi could reach as high as the 9,400 level if it reverts back to the ten-year historical price-to-earnings (P/E) ratio of 16.2x. Alternatively, it could go as low as the 4,300 level if it posts a 9x P/E and a 10% annual drop in EPS.

She said some of the drivers for the PSEi’s growth in 2024 include slower inflation and interest rates, increased government spending, affordable and under-owned stocks, and the resilience of the country’s economy.

“Philippine stocks could finally enter a bull market this year as the outlook for economic growth looks bright, and as stocks are cheap and under owned,” Ms. Tan said.

Despite the positive outlook, Ms. Tan said the risks faced by the local bourse include higher inflation and interest rates, an escalation of geopolitical tension, negative surprises to the government budget, and the potential impact of a possible recession in the US economy on Philippine securities. —