THE Philippine Stock Exchange Index (PSEi) could end in the range of 6,998.71 to 7,665.26 this year, led by strong economic projections, according to brokerage firm Philstocks Financial, Inc.
“We project the local equities market to end within 6,998.71 to 7,665.26 this 2024, presenting an 8.51% to 18.84% potential upside from end-2023 levels. This is hinged on the assumption that the earnings per share of our index member companies will grow by 5% to 15%,” Philstocks said in a report on Thursday.
The projection could be met based on factors such as slower inflation and stronger economic growth, it said.
“The robust economy is still expected to help in our corporates’ profitability, mainly through the strengthening of their revenues. The continuous growth of the economy is expected to lead to higher incomes on an aggregate level which in turn would sustain the demand for our corporates’ products,” it said.
“A slowdown in inflation is also seen to help in boosting revenues especially of our consumer leaning companies. Rising input costs and high interest expenses however are seen as risks to company bottom lines,” it added.
The Philippine Statistics Authority recently announced that the country’s GDP expanded by 5.6% in 2023, below the government’s 6% to 7% target and slower than the 7.6% increase in 2022.
However, Philstocks said that some of the risks to its projection include the threat of higher inflation and the higher interest rates.
“Our forecast may not be met this year if economic growth sharply decelerates; inflation does not fall within or near the government’s 2%-4% target; the Bangko Sentral ng Pilipinas does not ease its monetary policy this year; and the Federal Reserve does not follow up on its hint of doing three 25-basis-point rate cuts this year,” the brokerage firm said.
The country’s inflation rate averaged 6% in 2023, higher than the 5.8% recorded in 2022, despite dropping to 3.9% in December.
On Thursday, the benchmark PSEi fell by 23.43 points or 0.35% to 6,623.01 while the broader all shares index retreated by 13.46 points or 0.38% to 3,486.03. — Revin Mikhael D. Ochave