MANILA, Philippines -- The Philippine Stock Exchange Index (PSEi) is expected to stay above the 5,000 level in the upcoming week despite negative factors outside the country, analysts said.
Last week, the PSEi advanced 2.77% week-on-week to 5,062.44, mainly due to the better-than-expected 6.4% growth in first-quarter gross domestic product (GDP), as well as the rating outlook upgrade from ratings agency Moody’s Investor Service.
“The PSEi will be keeping its pace and position above 5,000 throughout next week. Although there are negative factors outside of the Philippines, the strength of its economic fundamentals provide a balance to external troubles,” AB Capital Securities Inc. analyst Arlysa E. Narciso said in the brokerage firm’s weekly outlook.
“The Q1 GDP was a good start especially with the rise in the government's spending through its infrastructure projects. Tourism and real estate, which were mentioned as growth drivers, is still expected to be major contributors to growth for this year,” she added.
Narciso, however, admitted that economic problems in Europe, China and the United States remain major concerns for the market.
Last Friday, the Dow Jones industrial average dropped 275 points, the index's biggest loss since November 2011 -- or 2.2% -- to 12,118.57, after a US jobs report showed that unemployment in the U.S. rose to 8.2% in May, with the long-term jobless rising by 300,000.
The Standard & Poor's 500 index and Nasdaq composite index both fell more than 2%.
The Dow is now off 0.8% for the year.
Narciso said the brokerage firm is keeping its “buy’ recommendations for mall developer SM Prime Holdings Inc. and First Philippine Holdings Inc. “in line with expected growth this year and industry performers.”
“SM Prime's valuation is justified by its aggressive growth and expansion,” she said, while first-quarter earnings of First Philippine Holdings “exceeded” expectations.
AB Capital has a price target of P17.20 for SM Prime shares, and a revised target of P88.28 for First Philippine Holdings shares.