MANILA -- Online stock brokerage COL Financial sees corporate earnings growing 13 percent this year, boosting the rise of the Philippine Stock Exchange index (PSEi) to 8,600 this year, and even reach a new high of 9,100 level by next year.
“It (the market) will still grow next year because we are anticipating a 9-percent growth. It’s lower than in 2018, but it’s still up. In general, its double-digit (growth) for your strong sectors,” April Lynn Tan, Chief Equity Strategist at COL Financial, said in a press briefing on Monday.
Tan was referring to properties and banks sectors, which she considered as “attractive valuations”.
She noted the property sector is boosted by the strength of both the residential and the office leasing sectors; while banks are anticipated to stage a strong recovery this year amid higher trading gains resulting from lower rates.
“We’re thinking if the second half GDP (gross domestic product) growth does pick up then, that helps companies boost stronger earnings and we may see earnings growth surprises in the second half of 2019 and 2020,” she added.
Tan said the PSEi is expected to grow slower by 9 percent next year due to the potential reduction in rates of Manila Electric Company (Meralco) to reflect lower inflation rate and reduced interest rates, among others.
“Although Meralco is just one company, remember that it impacts the earnings of MPI (Metro Pacific Investments) and JG Summit. So the three of them combined accounts for 9 percent of the index, so medyo malaki yung weight nya (its weight is slightly bigger). (Growth will still be) double-digit (without Meralco) but will be slower double-digit,” she reasoned.
In 2019, Tan is optimistic about hitting the 8,600 year-end target for the PSEi amid global factors.
“The Philippine bull market will most likely continue as factors that hurt performance last year such as inflation, interest rates, the peso and foreign fund flows have reversed,” she noted.
The PSEi is now hovering at 8,188.
However, Tan pointed out the bull market will most likely be volatile as the global economic outlook remains poor.
“Although central banks are loosening their monetary policies, it remains uncertain if they will succeed in addressing economic growth concerns,” she added. “Given expectations of heightened volatility, we advise investors to manage size, invest only long-term money and focus on attractively valued stocks.”
Meanwhile, COL Financial’s favored sectors this year are properties, banks and airlines. (PNA)
