PSEi seen to finish strong at 8,500 in 2019

MANILA, Philippines – Amid challenges in the Philippine economy in the first half of the year, analysts are bullish that the benchmark index will end on a high note in 2019.

Philstocks senior research analyst Japhet Tantiangco said in a briefing on Friday, July 5, said that they are projecting the Philippine Stock Exchange index (PSEi) to end at 8,500 in 2019.

The figure is higher than their previous estimate of 7,750 to 8,400. (READ: PSEi is ASEAN's 3rd best in 1st half of 2019)

“During the latter part [of the first half of the year], we saw a steep upward slope for the market, touching 8,000 and formed an ascending triangle pattern, which is a bullish signal,” Tantiangco said.

Graph from Philstocks

During the first 6 months of the year, the PSEi recorded 5 months of gains with a 4-month gaining streak from March to June.

Most of the counters registered gains, with services (18.6%) and properties (17.8%) leading the pack. 

Only financials incurred losses of 3.4% amid the tightening of monetary policy by the central bank.

Table from Philstocks

While the stock market is seen to improve, Philstocks head of research and client engagement Jun Calaycay said they revised downward their economic growth outlook.

From 6.2% to 6.7%, Philstocks revised its gross domestic product growth outlook to 5.9% to 6.3%, following the national budget impasse that dragged on for over 4 months in Congress.

Calaycay said the delayed passage of the 2019 budget would make it difficult for the government to play catch up.

However, Calaycay said that inflation was seen to significantly slow down below expectations. From 4.5% to 5.5%, they now see inflation to settle just at 2.5% to 3% – also within the government’s target range.

He said lower inflation, along with accomodative policies, would help boost corporate earnings.

Table from Philstocks

The Philippine peso is also seen to gain strength, projected to trade between P52 to P53 against the US dollar. The appreciation of the peso is seen to entice foreign investors to park funds in the local market.

Corporate earnings are seen to end between 10% to 15%.

The PSEi closed at 8,117 on Friday, gaining 0.66%, with most of the counters in the green except for mining and oil (-0.72%) and services (-0.22%). – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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