In its midyear report dated July 30, First Metro Securities Research is now forecasting enough momentum to push the Philippine Stock Exchange Index over 7,000 in the next 12 months.
“At this juncture, we are turning less bearish on Philippine equities,” according to the report, prepared by equity research head Mark Angeles and Estella Dhel Villamiel, head of research for institutional clients.
“The market remains vulnerable in the interim as the business cycle bottoms. We see the market moving higher towards the latter part of the year, as it prices in a cyclical recovery in the economy and earnings next year,” the report showed.
How high are we talking?
Until June 2025, First Metro Securities said the PSEi could move as high as 8,000, which is the best-case scenario.
Its base case—where the economy grows 5.3-5.4 percent and corporate earnings grow by 7-11 percent—is 7,000.
The bear case is 6,000, which is relatively close to the market’s present level at around 6,400.
What's driving this?
Several things would need to go right for this upward trend to materialize.
First Metro Securities said this includes earnings growth driven by easing inflation, higher sales, and favorable conditions.
It also anticipates foreign fund outflows to slow, with a potential increase in investments in Philippine equities due to market reforms.
Additionally, a boost might come from “friendshoring”, where companies move supply chains to politically and economically stable allied countries.
What could go wrong?
There’s a risk the economy will slow, a foreign fund exodus due to rising interest rates, and a severe US downturn that necessitates larger-than-expected rate cuts, sending the market into panic.
Stock themes to play
First Metro Securities divided the picks into two major themes. First, the “guarded stance” for defensive stocks.
These are RL Commercial REIT with a target price of P5.64, MREIT Inc at P14.06, Century Pacific Food at P37.50, Converge ICT Solutions at P13.30, Monde Nissin Corp. at P11.20, Robinsons Land Corp. at P22.50, and Universal Robina Corp. at P145.00.
Then there are the “early cycle playbook” stocks, which stand to benefit from a cyclical recovery in their sectors.
These are Ayala Land Inc. with a target price of P35.80, Bank of the Philippine Islands at P141.00, BDO Unibank at P167.00, Jollibee Foods Corp. at P300.00, SM Investments Corp. at P1,030.00, and SM Prime Holdings at P36.00.
Financial market recommendations and comments on InsiderPH News belong solely to the analysts and institutions making them. They do not represent buy, sell or hold recommendations of InsiderPH News. Investments held by analysts or institutions may influence their recommendations. Investors should conduct their own research and carefully evaluate all relevant market information before making investment decisions. As always, the past performance of any investment does not guarantee its price appreciation in the future.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
