After a marked slowdown in activity in the local equity market in the first half of the year, more companies are expected to tap the market during the second half amid optimism the economy and stock market will perform well.
During the First Metro Investment Corp. (FMIC) mid-year economic briefing held in Makati on Thursday, FMIC Head of Investment Banking Justino Juan Ocampo said more companies may try to catch up and take advantage of the lingering optimism toward the economy by tapping the local stock market for fund-raising.
“In the first half, not too many companies were prepared to enter the equity market but we should see more companies rushing to tap the market in the second half,” Ocampo said.
Bede Gomez, assistant vice president at FMIC, told reporters the upward trend in the stock market is being pushed by robust manufacturing, higher private and government consumption, faster public-private partnership execution and further pick-up in foreign direct investment.
Because of these factors, Gomez said that the benchmark Philippine Stock Exchange index (PSEi) is poised to hit 7,000-7,200 levels, not far from the current range of 6,800-6,900 levels.
According to him, key growth industry drivers for the market will be property and infrastructure, power and utilities, consumer products, gaming, and manufacturing.
Asked when the market could possibly top the 7,400 level, Gomez only said “it will be difficult to speculate at this point.”
“But if that would happen, we don’t see it happening by the end of the year,” he added.
In March last year, FMIC set a higher annual target for the PSEi within the range of 7,300 to 7,400, based on enthusiasm for the country’s newly-attained investment-grade sovereign credit rating, and the general increase in activity that typically accompanies an election year.
Although the 7,400 was briefly breached on May 15, 2013, with the market closing at an all-time high of 7,392.20 that day, by the end of the year the market had surrendered almost all its gains and finished the year only 1.3 percent higher than 2012, the worst year-on-year gain for the market since 2008.