PSEi to end 2013 at 7,250-7,500 – analyst

MANILA, Philippines — The Philippine stock market will still settle above the 7,000 mark by end-2013, despite “challenges” in the second half of the year, online brokerage firm COL Financial projected.

In a briefing on Tuesday, August 6, COL Financial vice president and research head April Tan said the benchmark Philippine Stock Exchange index (PSEi) is still expected to reach new highs following a recent correction and may end between 7,250 and 7,500 this year.

She said a favorable economic outlook given robust consumer and government spending would buoy the market, and offset poor investor sentiment as well as the effects of rising interest rates and a weaker peso.

“Poor investor sentiment is one of the challenges that we see right now. Although the stocks may look cheap, investors might be gun-shy. Investors might not want to buy stocks,” she said.

Tan said the market has suffered a correction as foreign investors dumped emerging markets in favor of developed ones on hints the US Federal Reserve might withdraw its bond-buying program.

Read: PSEi wipes out nearly all of year’s gains

On Wednesday, August 7, the PSEi closed flat at 6,420.79. On Tuesday, it settled at 6,420.78.

‘Be selective in buying stocks’

Investors are advised to avoid buying stocks of banks and airlines, among others, because they are likely to post weak earnings growth in 2014.

Tan said banks’ profits may not grow as much as volatile markets hurt their trading portfolios.

Airlines, on the other hand, have been hit by high fuel costs.

Sectors that are expected to perform strongly include telecommunications, consumer, and services.

Tan said investors should use a “staggered approach” in buying stocks.

“This is not the time to be aggressive in your purchases. This will be a buyer’s market. And it will be best to be more patient in buying. Maybe do a monthly cost averaging to actually improve likelihood of getting a better average purchasing price,” she noted.

Among the brokerage firm’s stock picks are Robinsons Land Corp., EEI Corp., Ayala Corp., Puregold Price Club, Alliance Global Group, Megaworld Corp., Philippine Long Distance Telephone Co., and D&L Industries. – Rappler.com