COL: PSEi may rebound to 7,500 by year-end
Despite lingering geopolitical concerns and market uncertainty, leading online stock brokerage COL Financial is keeping its year-end target of 7,500 for the Philippine Stock Exchange Index (PSEi), maintaining the same bullish outlook outlined at the beginning of the year.
At a media briefing on Monday, COL chief equity strategist April Lynn Tan said the target is based on a recovery in local price-to-earnings multiple to 12 times, which remains below the long-term historical average.
Tan noted that the local market is currently trading at around nine times earnings, a level she described as very cheap and comparable with valuations seen during the global financial crisis.
“If we want to reach 12 times, which is minus one standard deviation, we’re at 7,500,” she said, adding that such a valuation would only bring the market back to levels seen in 2024.
The brokerage sees immediate resistance between 6,400 and 6,500, followed by a stronger hurdle at 6,650 to 6,670. It identified the upper end of multiyear index trading range at around 7,460 to 7,560, close to its year-end target of 7,500.
“We are staying more constructive on the Philippine stock market despite the extremely volatile geopolitical environment as oil prices are close to prewar levels,” Tan said. “There are also indicators that consumer spending is recovering and business sentiment is improving because of lower oil prices.”
For his part, COL chief technical analyst Juanis Barredo believes the market is more likely to recover to its prewar level before attempting a climb toward 7,500.
‘Broader consolidation’
He noted that the recent peak of around 6,600 before the Iran conflict is only about 3 percent away from current levels, making that target achievable within the year.
Reaching 7,500, however, is seen to be a bigger challenge.
“That’s possible, but I give it about a 20- to 25-percent chance,” he said.
COL’s latest market outlook described the PSEi as being in a short-term rally within a broader consolidation, with technical indicators showing that momentum remains positive and the market is not yet overbought.
The target is also broadly consistent with COL’s outlook at the start of the year. In its January market outlook, the brokerage said the PSEi could challenge the 6,570 to 6,700 resistance zone before potentially advancing toward the upper end of its long-term trading range at 7,460 to 7,560.
COL also advised investors to focus on fundamentally resilient companies while treating the current advance as a tactical trading opportunity, noting that fresh turning points could emerge later in the year.
