PSEi seen to recover to 7,500 next year
While Philippine stocks seem stuck in a slump amid a string of graft allegations and calamities, the local stock barometer could still make a turnaround to hit as high as the 7,500 level next year.
This is based on the latest market report of First Metro Securities Brokerage Corp., which sees the benchmark Philippine Stock Exchange Index (PSEi) finishing at 5,500 at the minimum to as high as 7,500 in 2026.
Reaching the bull case of 7,500 is possible, it said, provided that the government could push for stronger reforms and more efficient deployment of public funds, and draw in fresh foreign capital.
Investors also need to see a more stable or faster economic growth.
Out of the three scenarios, First Metro Securities said governance reforms and robust foreign inflows could be “more probable.”
The base case scenario of the brokerage house sees the PSEi at 6,500, suggesting a “familiar, cautious path.”
“Governance reforms are achievable with sufficient political will, while foreign flows are already showing signs of recovery, with outflows tapering and rolling 52-week flows turning positive in recent weeks,” it said.
For the past months, the PSEi has been struggling to regain its strength or keep the 6,000 level, given the nagging political noise, especially after the revelations on multibillion-peso corruption linked to flood control projects.
Some politicians, including President Marcos himself, have been accused of accepting payoffs.
The issue has also affected the economy’s performance. Just last quarter, the Philippine economy recorded a four-year low expansion following tight public spending and weaker household consumption.
First Metro Securities noted that local shares “have underperformed regional peers year-to-date…”
Worst since the pandemic
The PSEi recorded its worst finish in five years last month, dropping to the 5,600 mark.
“This weakness reflects confidence shocks stemming from a series of calamities and ongoing corruption probes, which disrupted both public and private sector activity,” it said.
“Additionally, a narrowing interest rate differential between the Bangko Sentral ng Pilipinas and the Federal Reserve weighed on the peso, pushing the currency near historic lows,” it added.
With the current state, it expects the market to remain cautious.
“For now, the market appears poised to take the familiar route: a ‘muddle-through’ path as caution persists over the next 12 months,” First Metro Securities said.
Diving into its bear case of 5,500 may still happen, particularly with “deeper erosion of confidence and materially weaker-than-expected economic or earnings growth,” it said.
