Stock index seen to rally to 8,800 level this year

First Metro Investment Corp. sees the Philippine Stock Exchange index (PSEi) hitting 8,400 to 8,800 this year as it stages a comeback after a volatile 2018.

In a briefing yesterday, FMIC vice president Cristina Ulang said the stock market is expected to perform better this year due to the expected recovery of the domestic economy.

“We also expect corporate earnings to recover,” Ulang said.

FMIC said earnings per share of companies could grow 10 percent, while price earnings ratio is seen trading 18 to 19 times.

Ulang said the market was battered in 2018 as foreign fund managers dumped Philippine shares.

“From a very strong performance in the beginning of 2018, soaring to as high as 9,058, the equities markets dove to 6,843, which was a big disappointment last year. This year, it is anticipated to recover, underpinned by faster domestic growth and stronger corporate earnings,” FMIC said.

With better economic outlook and a more favorable market environment, capital raising is expected to recover from its 25 percent slump in 2018 and is projected to expand by 51 percent to P824 billion this year, the investment banking arm of Ty-owned Metrobank Group said.

Debt or fixed income issuances will almost double to P618 billion due to the anticipated quadrupling of bank bonds, FMIC said.

However, the volume is expected to decline by nine percent to P206 billion as various banks already raised funds, said FMIC senior executive vice president Jose Pacifico Marcelo.

Initial public offerings (IPO), however, will pick up with deferred issues boosting volume to P62 billion from only eight billion in 2018, Marcelo said.

Domestic bond interest rates, meanwhile, are projected to decline by 50 basis points as a result of various factors such as declining inflation, slower policy rate hikes by the US Federal Reserve and possible policy rate cut by the Bangko Sentral ng Pilipinas in the second half.