PSE index may reach 7,500 points this year, says FMIC
The benchmark Philippine Stock exchange index (Psei) could hit 7,500 points this year on improving investor sentiment, First Metro Investment Corp. (FMIC) said Wednesday.
Cristina Ulang, FMIC head of research, said this development may not necessarily take place towards the end of 2023 since the market is expected to be volatile this year. She said reaching the 7,500-mark may happen “anytime” or when the stimulus package of the government kicks in and inflation tapers off towards the end of the year.
“So be vigilant and do value hunting,” Ulang said, adding that stock selection is key to the investment strategy for the year.
FMIC said companies with low debt and high capitalization are preferred as well as those with big market share, strong cash flow and are able to give out high dividends.
Stocks with exposure to themes that are linked to the basic needs of the country are projected to perform well. These themes include greater energy sufficiency, fuel security, disruptive technology, renewables and sustainability, the bank said.
Ulang also advised to look for companies with very low debt.
“Don’t forget, investors should be very vigilant because this is a volatile market. This is a high interest rate regime. Low debt is the rule, high capitalization, of course, inflation year, margins are being squeezed. Look for companies that have wide margins, that has very good margin resiliency, that can pass through (the cost),” Ulang said.
The PSEI closed at 6,709.34 points on Wednesday, down by 47.35 points from the previous close.
Daniel D. Camacho, the FMIC’S head of investment banking, said the two firms that deferred its initial public offering last year may launch its maiden share sale this year. These are Upson International Corp. and Razon’s Prime Infrastructure Capital Inc.
“Understandably, we cannot disclose some of the other names. But there are plans. I would think, though our view is, volume will be at or slightly lower this year than last. Considering that, as we all mentioned, views on inflation and rates tend to provide some caution to our issuers, both on the equity and the debt side,” Camacho said.
On the debt markets, FMIC said frequent issuers are anticipated to come back through refinancing opportunities but may exhibit caution in the early part of the year until there’s a better picture on the trajectory of inflation and interest rates. Issuances should pick-up in the second half, it added.