MANILA, Philippines - The Philippine Stock Exchange index (PSEi) may reach a high of 7,100 this year.
PJ Garcia, senior vice president of BPI Asset Management, believes the local stock market has yet to reach its peak because foreign investors continue to look at emerging markets like the Philippines.
"I think it will be another good year for the stock market but of course, the market doesn't go up in a straight line. There will be some pullbacks here and there... Last year, we had 38 new highs. This year it will be hard to replicate that but for sure given the strong interest in the Philippines we may continue to end the year on a new high," Garcia told ANC.
While the PSEi has already notched several all-time highs in the first three weeks of January, Garcia believes the market has legs.
"I don't think this is the peak. We see investors again look at emerging markets, Asia, Southeast Asia... ASEAN economies have been the best performing economies and markets in the last 5 years," he said. "The bad news is that the Philippines is expensive relative to other emerging markets and it will continue to become expensive this year."
Garcia said the continued strength of the Philippine economy, coupled with election spending and a possible investment rating upgrade will likely push the market higher.
"This year we have our base of 6,500 but that doesn't take into account a credit rating upgrade or GDP growth of 6.5-7% or earnings growth of 17-18%. Right now earnings growth is at 10% and consensus GDP growth is around 5.5%, so once we see GDP growth go higher and earnings growth also kick in at more 15% , we can see (the market) possibly at 7,100," he said.
On Monday morning, the PSEi inched closer to the 6,200 level. The main index stood at 6,176.41, up 0.61% as of 12 noon. The new intraday high stood at 6,193.25, just a few points shy of the 6,200 level. - With ANC