MANILA -- Despite being the worst performing bourse in the region for the past five months, HSBC Private Banking forecasts that earnings per share (EPS) in the Philippines Stock Exchange (PSE) will grow by 10 percent by the end of the year.
In a media briefing Wednesday, the bank’s Managing Director and head of Investment Strategy and Advisory for Asia Fan Cheuk Wan said the fundamental factor will drive the local stock market to a rebound in the second half of 2018.
“We expect the Philippine stock market to recover going to the second half of the year, mainly because of the positive macroeconomic fundamentals. Because the growth outlook of the Philippine remains constructive,” Fan said.
“The infrastructure, investment growth for economic expansion, and private consumption continue to stay robust supported by strong remittance, and we do expect the 10 percent earnings growth for the stock market for the full year will provide a stabilizing factor,” she added.
Fan noted that the volatile market during the first semester of 2018 was due to investors’ concerns over the strengthening dollar and the hiking of key policy rate by the United States Federal Reserve System. She projected that the US Fed will likely raise interest rates twice in the remaining months of the year.
On the other hand, outlook for the Philippine peso against the US dollar is expected to close this year at PHP52.
“In the Philippines, we are positive in the infrastructure and consumption-related sector. These two sectors also reflect the major growth engines of the strong structural growth in the Philippines,” Fan said.
But despite the 10-percent growth outlook on earnings for the year, the bank is neutral on the country’s equities, as this continues to trade at a premium compared to its regional peers. Fan mentioned that this is lower than the regional average. She said MSCI Asia ex Japan, which tracks Asian equity markets except Japan, is expected to hit 15 percent growth on EPS for 2018.
“MSCI Asia ex Japan is projected to deliver EPS growth of 15 percent. The Philippines is actually lagging behind the regional peers. But after the first half correction, we do expect market recovery,” Fan said. (PNA)
