Despite its current downtrend, the Philippine Stock Exchange index (PSEi) could still recover and hit as high as 7,300 next year, a unit of the Bank of the Philippine Islands said.
“We’re sticking to our 7,300 target for next year...” BPI Head of Asset Management & Trust Research Carlos A. Jalandoni said in a briefing on Thursday.
He noted, though, that this forecast is for the equities market prior to the Federal Reserve’s tapering of its massive stimulus program. Should the US central bank decide next year to start winding down its monthly bond-buying program from its current pace of $85 billion, there could be “some noise, some volatility.”
“But at the end of the day, it is a good story because the Philippines’ fundamentals should be good for the next two-three years,” he said.
The PSEi fell for the fifth straight day on Friday, shedding 38.05 points or 0.62% to 6,084.84
“There’s enough earnings momentum to justify the market testing the previous high again of 7,300-7,400,” Mr. Jalandoni said, adding that market earnings could grow by 9-10% in 2014.
He noted that earnings in the third quarter, minus the banks, was about 9%. ,
Mr. Jalandoni said the Fed’s decision on the tapering will definitely have an impact on financial markets, although the effect is still unpredictable.
“Tapering, big or small, will have a negative impact on markets...” he said.
Aside from causing volatility in the local stock market, the tapering is also seen to drag the currency down as most investors could flock to safe-haven currencies like the dollar.
The bank expects the peso to trade at about P44.60 against the dollar next year due to the taper. Mr. Jalandoni pointed out, though, that a weaker peso would benefit the country’s struggling exports.
The peso stood at P43.86 against the greenback on Friday, losing 10.5 centavos from its P43.755-a-dollar close the day before. -- D.J.B. Evite
http://www.bworldonline.com/content.php?section=Corporate&title=PSEi-could-hit-7,300-in-2014----BPI&id=79784
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