First Metro Investment Corp (FMIC) [link] head of research, Cristina Ulang, said that the PSEi could rise to as high as 7,500 this year thanks to a projected 11% growth in corporate earnings and policy rate cuts that “could be coming soon”. Ms. Ulang said that a drop in bond yields (due to a drop in the interest rate) could spark additional interest in the stock market and that interest could attract IPOs, follow-on offerings, and other equity-raising transactions. FMIC’s Daniel Camacho said that slowing inflation and a falling interest rate could also boost demand for debt, but that we aren’t likely to see any of that demand resurface before a BSP pivot, which Mr. Camacho doesn’t think will come until H2/24.
MB BOTTOM-LINE: All of this stuff sounds great, but it’s important to listen to the fine print and disclaimers that Ms. Ulang and Mr. Camacho are using to temper expectations. None of this pillow talk is applicable if “inflation disappoints” or “[the GDP number] may not hit the target”, or if “El Nino proves to be stronger than expected.” But those are just the known unknowns, the variables that we know and can prepare for. Are there any unknown unknowns, like the pandemic in 2020 or the Russian invasion of Ukraine in 2022, that will rise up and have a significant impact on how the year plays out?
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