COL forecasts PSEi ending 2018 at 8,600

The Philippine Stock Exchange index (PSEi) may have already hit bottom at 6,900 and is now on a recovery and consolidation stage with enough strength to rise as high as 8,600 by year-end.

Top online brokerage firm COL Financial’s Head of Research and Chief Equity Strategist April Lynn Tan said though that the target is lower than their estimate of 9,100 at the start of the year due to the effects of inflation and global factors.

“We don’t expect the current strength of the PSEi to be sustained in the short term, allowing it to return to its previous high given the absence of catalysts,” she said.

However, Tan noted “there are numerous indicators strengthening our conviction that we have already seen the low at 6,900 including the magnitude and duration of the ongoing correction, attractive valuations, more subdued expectations and the Philippines’ still favorable economic growth outlook.”

She said the market will be boosted by stronger-thanexpected earnings of domestic companies, the peaking of inflation and the possible strength of US and Chinese corporations despite the trade war.

However, Tan noted that Philippine inflation seems to be taking longer than expected to peak while stronger US, China and Philippine corporate earnings are not expected to materialize until the fourth quarter.

The good news is that the recent market correction to the 6,900 level is seen to be more than adequate while most negative factors are already reflected in the price of local stocks.

She also noted that the country’s economic growth remains strong due to higher consumption and government spending although inflation due to recent tax reform is leading to lower earnings per share of listed firms.