PSE index to hit 7,800 level by end-2015

MANILA, Philippines – Online brokerage firm COL Financial is expecting the bellwether Philippine Stock Exchange index (PSEi) to rise to the 7,800 level by the end of 2015, buoyed by improving outlook on both global and domestic economies.

The stock market however will remain weak in the second half of 2014 due to concerns on inflation rate, political noise stemming from the Development Assistance Program controversy, and higher valuation of PSEi, COL Financial research head April Lynn Tan said in a briefing Thursday, July 31.

“However we believe that the stock market will exit the consolidation phase in 2015 and the second half of 2014 would be the best time to start positioning for this eventuality,” Tan said.

On Thursday, the PSEi fell 2.77 points, or 0.04%, to close at 6,864.82.

The index, the barometer of stock market performance, hit an all-time intraday high and close of 7,028.50 and 7,021.95 points, respectively, last May 31.

Bullish for 2015

Among the factors contributing to the positive outlook for 2015 are slower-than-expected monetary tightening globally, and a slight increase in interest rates domestically.

Likewise, Philippine economic growth is gaining momentum, thanks to resilient consumer spending, and higher investments and infrastructure spending. Earnings of listed companies, particularly banks, are also expected to recover starting next year.

COL Financial vice president for sales and customer support services Juan Barredo and chief technical analyst said the current market consolidation could push the PSEi to between 6,500 and 6,700l.

Barredo said trading would be volatile until October to November this year because of worries about rising inflation rate and interest rates.

This scenario, however, will be an opportunity for investors to re-enter the market.

“… Expect a possible reactive drive into the 3^rd quarter that may open a new trading buy window closer to 6,700 or 6,500,” Barredo said.

COL Financial’s favorite sectors are banks (BDO Unibank and Metrobank); power (Aboitiz Power); infrastructure (Ayala Corporation and EEI Corporation); property (Ayala Land, Megaworld, and SM Prime Holdings), and consumer (D&L Industries). – Rappler.com