The Philippine stock market remains a bull market amid the extended consolidation it is currently undergoing because of external developments, according to online brokerage COL Financial Group Inc.
Juanis Barredo, chief technical analyst of COL Financial Philippines, said in a briefing on Tuesday that even though it is highly expected that Philippine stocks will remain in consolidation over the next few quarters, it is still ahead of other emerging markets (EM).
“We’re still in a bull market, we’re just experiencing a very extended pause,” Barredo said.
“The local market may be side-stripped for the meantime, but there will be stand outs and good pockets of activity as depicted in a year to date returns of about 2 percent . . . clearly higher than many other EMs that are expressly negative year-to-date,” he further said. Barredo said that unless the market breaks the 5,700-point level, then it can be called a bear market. But as of now, the long-term uptrend is still intact.
“PSEi [Philippine Stock Exchange index] may yet have to complete its corrective sway, but we are hopeful that much of corrective intent has been priced in,” he said.
For the whole year, COL Financial is seeing the PSEi growing at a conservative level of 6,600 points to 6,900 points due to the ongoing consolidation, which started since May last year when former Federal Reserve Chairman Ben Bernanke made an announcement of the tapering of its monthly bond purchases to $75 billion from $85 billion.
According to Juanis, the signal that the consolidation is over is when the main market index will hit beyond 6,560 points or fall within the 5,700-point area.
April Tan, COL Financial Research head, for her part, said the possibility that the PSEi will not reach the 6,900-point level is quite unlikely, given that the anticipated dampeners will just be temporary.
“It’s more of interest rates shooting up even further or [Philippine] peso weakening even more substantially. But the likelihood is not so much. If ever, it’s just interest rates going up but it’s just temporary,” she said.
Optimistic on 10,000 points
Overall, the group is still optimistic about the market despite its current bearish tone, adding that it is keeping to its previous target that the PSEi may still reach the 10,000-point level.
“We believe the ongoing sell-off in the Philippine stock market is an opportunity to accumulate. Compared to emerging economies, the Philippines is fundamentally stronger with its growing current account surplus,” Tan said.
She reiterated that the benchmark index will still reach 10,000-point mark, but that may be delayed by just a few years.