PSEi forecast to touch 7,000

MANILA, Philippines —  The Philippine Stock Exchange index (PSEi) is set for recovery as it is expected to hit 7,000 to 7,500 by the fourth quarter of this  year, according to  First Metro Investment Corp. (FMIC).

FMIC believes that a string of good news may encourage investors to return to the market this year.

“In the capital markets, the much-awaited policy pivot along with a slowdown in inflation is poised to entice debt issuers  back into the market, capitalizing on reduced borrowing costs,” FMIC said.

These positive factors include improving investor sentiment, easing equity risk premium arising from declining inflation and  interest rates, and resilient double-digit corporate earnings.

“It is expected to hit 7,000-7,500 supported by earnings per share  growth of 11 percent and a price earnings ratio range  of 12.6x to 13.6x,” FMIC said.

In a presentation yesterday, FMIC head of research Cristina Ulang said the market would move up in the first quarter but would likely decline again in the second quarter because of the El Nino weather disturbance.

By the third quarter, the PSEi is expected to climb again ahead of the expected policy rate cuts of the Bangko Sentral ng Pilipinas and then onward to 7,000 to 7,500 by the fourth quarter.

“On the equity side, the potential easing of bond yields should boost the attractiveness of the stock market, encouraging  issuers to consider equity issuances as a valuable alternative for capital raising,” FMIC said.