‘Reopening of economy will allow PSEI to reach 7,800’

The benchmark Philippine Stock exchange index (Psei) could hit 7,800 points this year as most of its 30 members will post earnings exceeding pre-pandemic levels.

Maybank Securities said in its report that the PSEI will grow by 15 percent this year led by the conglomerate, property and banking sectors.

“We expect 2023 to be a continuation of 2022, in a good way,” the broker said. “Amid tapering inflation expectations, a more stable Philippine peso to dollar forecast, a steady regulatory environment and capped flow-driven downside risks to the market, we expect the PSEI’S improving fundamentals to be the key catalyst for this year.”

“As such, our 15 percent yearon-year earnings growth forecast for the market appears achievable as the economy has been fully reopened and is likely to remain open, while the adjustments to the corporate and personal tax rates should enhance corporate and domestic spending, driving economic activity.”

The PSEI closed on Thursday up by 124.19 points to close at 6,833.53 points.

The broker said earnings of the conglomerate sector may grow at 20 percent this year, the property sector may grow by 24 percent year-on-year on the back of normalized operations and construction activity.

Its 22 percent earnings growth forecast for the banks, meanwhile, hinges on net interest margin over average earning assets expanding following the 300 basis points interest rate increase in 2022 and an 8 to 12 percent loan growth assumption.

The only exception, the broker said, is the industrials and utilities sector, as it forecast earnings to decline by 2.5 percent year-on-year due to softer coal prices.

Its earnings forecasts factors oil at $100 per barrel, inflation at 4.6 percent and the peso-dollar exchange rate at P54 to $1.

“The derating of the PSEI in 2022 as a result of the high inflationary environment and weak Philippine peso has opened a buying window for several quality stocks with strong economic moats and multi-year earnings growth profiles,” the broker said.

“We prefer stocks with significant exposures to improved mobility and domestic consumption.”

Maybank expects the country’s economy as measured by GDP to grow at a slower rate of 5.5 percent this year.

“Apart from continued improvement in employment rates and sustained OFW remittances, which we expect to grow by 3 percent yearon-year, the reduction in personal income tax rates should boost domestic consumption by 6.4 percent year-on-year.”