Nomura sees PSEi hitting 9,100 pts by 2018

MANILA --Online brokerage BDO Nomura Securities Inc. expects the local stock barometer to rise to the 9,100 points by the end of 2018, bolstered by strong economic growth story of the Philippines.

Dante Tinga Jr., head of equity research at BDO Nomura Securities, remains bullish about the outlook for the stock market despite rising inflation and interest rate environment.

“Philippine GDP (gross domestic product) remains above trend,” he said in a press briefing.

Tinga said core earnings growth for Philippine stocks is expected to increase by 13.9 percent in 2018 from just 5.3 percent this year.

“So our view is, the acceleration in the earnings growth should more than offset the risks associated with rising inflation. That is why, we are still positive on Philippine stocks,” he said.

Tinga expects the market to continue trading at price-earnings (PE) ratio of 19 times due to rising inflation.

“Earnings growth –not multiple expansion- should provide the catalyst to drive share prices higher in 2018,” he said.

In terms of stock picks, Tinga said property, banks and industrials will be the sectors that will generate the healthiest earnings growth.

He also identified sectors that will be negatively affected by rising inflation, including consumers, utilities and telecommunications.

Nomura projected the barometer Philippine Stock Exchange index (PSEi) reaching 8,300 this year.

The Japanese think tank last week slightly raised its forecast for Philippine GDP to 6.9 percent in 2018 from an earlier projection of 6.8 percent.

It attributed rising inflation to higher oil prices and the impact of tax reform. (PNA)