MANILA – BDO Securities Corp. has forecast that the Philippine stock market would reach the 7,500 level by the end of 2023 so long as inflation continues its downward trajectory and interest rates start to stabilize.
In a media roundtable in Mandaluyong City on Thursday, BDO Securities head of research Abigail Chiw said, “We think the catalyst for the stock market to rally is if investors see a sustained downtrend in inflation and expectation that interest rates will normalize after... Our 7,500 target is really based on estimates in terms of earnings growth.”
The Philippine Stock Exchange index (PSEi) closed at 6,566.39 points on the last trading day of 2022. It peaked at the 7,138 level in January.
“We are now down to 6,500 levels from about 7,100 during the peak in January. And really this is because of nagging concerns on inflation, interest rates, and slowing global growth,” Chiw said.
She cited the local and global developments early this year, such as the higher-than-expected inflation rate of above 8 percent in January and the concerns on American and European banks, which further rose interest rates, resulting in investors putting more of their money in fixed income or bonds securities that have “very good returns” of about 6 percent to 7 percent interest rates.
Chiw said it is still a good opportunity to invest in the local bourse.
“So, we think macroeconomic uncertainties currently will continue to weigh on the local market. However, we think for those who have a longer-term view, it is also a good opportunity to buy into stocks,” she said.
Chiw added that investors should consider stock picking and may look into specific sectors that can give better potential for yields.
BDO Securities first vice president and chief operating officer Bernhard Aloysius Tsai recommended investing in financials as this counter has been a lead performer since October last year.
Despite the concerns about the collapse of banks in the US and Europe, Tsai said Philippine banks are not that exposed to these banks.
Banks are benefitting from the higher interest rates, he said.
Aside from financials, the “next best thing” in the local bourse is in mining and oil, he added. (PNA)
