The stock market is forecast to trend higher toward new record territory by next year and will break through the 10,000-point psychological barrier by 2018 on local business growth and sustained recovery in the global economy and financial markets.
Investment management firm Philequity Management Inc. predicts the Philippine Stock Exchange index (PSEi) will sustain its strong performance and by the middle of next year will surpass its all-time high at the 7,400-point level, hit in May 2013.
ND Fernandez, an analyst at Wealth Securities Inc., an affiliate of Philequity Management Inc., also sees the PSEi claiming lost ground at the 7,400 level, then climbing past 8,000 points by 2016, driven by the market’s sustained positive performance and supported by a favorable economic and business environment in the Philippines as well as the international markets.
“We’re looking at 8,200 by 2016. So from then on, we see that we’ll grow 10 percent each year so you’ll hit 10,000 by 2018,” Fernandez told reporters in a joint briefing on Saturday.
Miguel Agarao, also an analyst from Wealth Securities, said the market may even go higher than their forecast levels of 8,200 by 2016 and 10,000 by 2018 if there are extraordinary gains or accelerated global and local activities that may boost the market over the period.
“There is a possibility of upgrade, but now we’re sticking to the forecast . . . But if we see good catalysts going on, like maybe more infrastructure spending and if the US markets go to a new high, then definitely we’ll see the Philippines go past our targets,” Agarao said.
On Thursday last week, the PSEi soared past 7,000 points for the first time this year since its highest close of 7,228.57 on May 29 last year. The PSEi ended at 7,061 on Thursday, after hitting an intraday high of 7,093.06.
During the briefing, Wealth Securities and Philequity founder Wilson Sy said that the market is poised to shoot up over the long term given that it “refuses to go down despite bad news”.
“When the market is refusing to go down, despite all of the bad news like the geopolitical concerns and conflicts in and outside the country, then it is probably going up for the long term,” Sy said.
Sy said that analysts have already factored in a majority of the tensions, concerns and issues before forecasting a 10,000-point benchmark index over the next four years.
In the international scene, issues include the turmoil in Iraq, a US-Russia clash, weak economic figures in China, the US Federal Reserve tapering, and the South China Sea dispute, among others. On the local scene, concerns include the Disbursement Acceleration Program (DAP) and Priority Development Assistance Fund (PDAF) issues as well as President Benigno Aquino 3rd bringing up the possibility of Charter change.
Despite the myriad geopolitical issues, Sy and Fernandez said the market will take its cue from the country’s strong economic performance, 2015 corporate earnings and sustained economic and business activities for the next few years, particularly in infrastructure, business processing outsourcing, and overseas Filipino workers’ remittances.
Earlier, listed online brokerage firm COL Financial Group Inc. also projected that the benchmark index will rise to the 7,800 level next year on the back of a positive economic and business climate, particularly given brisk activity in the property, construction, power and banking sectors.
On Friday, the PSEi held firm at the 7,000-mark, although it fell back 52.49 points or 0.74 percent to 7,008.51, while the wider All Shares lost 32.48 points or 0.77 percent to 4,168.32.