Online stockbroker Colfinancial.com is confident the Philippine Stock Exchange index (PSEi) could hit 8,400 this year despite risks due to the coronavirus disease 2019 (COVID-19) and the looming election.
April Tan, Colfinancial.com head of research, said an 8,400 high could translate to a 19x price-to-earnings (P/E) ratio, with the PSEi’s cumulative earnings per share growth pegged at 20 percent.
Tan said this is specially so given that the PSE has underperformed against most of its Asian peers last year as it is beset with the COVID-19 pandemic, rising inflation and a slower economic recovery.
“However, we remain optimistic as inflation has peaked, while the ramping up of vaccinations focused on vulnerable groups and National Capital Region (NCR) Plus should reduce deaths and help the economy recover faster, allowing the country to avoid a ratings downgrade,” she said.
“Corporate earnings are also recovering despite the ongoing crisis, while valuations of stocks are still cheap, with most trading significantly below their 10- year historical average P/Es,” she added.
Juanis Barredo, Colfinancial.com chief technical analyst, however said the market still continues to consolidate. It closed Monday’s trading at 7,2961.01, up 44.04 points.
Barredo said the recent US market weakness may have deferred the PSEi’s ability to steadily rise though a correction in the US may provide for the local market to break its resistance.
Barredo, however, said the market may face volatility starting in the second quarter of the year as the election date draws near, prompting investors to take profits.
