Juan Paolo Colet, managing director at top investment bank China Bank Capital, said this marks the PSE Index’s highest close since Jan. 27, 2020, before the beginning of the COVID-19 lockdowns that kicked off the two-year global health crisis.
He noted that buying was also supported by strong net foreign inflows of P1.35 billion during the session.
“Investors reacted to the combination of a surprisingly low Philippine headline inflation and a positive US jobs report,” Colet said in a text message.
Bullish trend
The rally at the PSEi, which has gained about 16.6 percent so far this year, is being supported by a host of bullish indicators, said First Metro Securities Research.
“As we had expected, the market has moved higher, pricing in the nascent signs of recovery that points to a cyclical upturn next year,” said Estella Dhel Villamiel, head of research for institutional clients.
“Key high-frequency data have turned more favorable, with inflation within target range, money supply growing at high single-digit growth, imports growth turning positive, and retail sales rebounding,” she said.
“Moreover, the recent policy rate cuts of the Bangko Sentral ng Pilipinas (BSP) and Federal Reserve reinforce our constructive call on the market, as lower risk-free rates support valuations,” she added.
PSEi going for 8,000?
Villamiel said the recent rally also supports more bullish projections for the PSE.
“We see these to support risk appetite in the interim, and we project the PSEi to trade towards our bull case targets of 7,400 and 8,000 by end-2024 and June 2025, respectively,” she said.
“While technical indicators are bullish, however, we suggest exercising caution at current levels as the local bourse hovers at the top end of its pandemic range. Hence, we prefer to buy on a pullback rather than chasing the current rally,” she added.
Top picks
Over the next 12 months, First Metro Research said further easing of monetary policy will benefit stocks such as MREIT, RL Commercial REIT, BDO Unibank, Bank of the Philippine Islands, and Metropolitan Bank & Trust Co.
Second, grocery retailers such as Puregold Price Club, Robinsons Retail Holdings, and SM Investments are expected to deliver strong earnings in the next two years.
Lastly, large-cap names like SM Prime Holdings, Jollibee Foods Corp., and companies benefiting from the Marcos administration’s Luzon Economic Corridor, including Ayala Land and Robinsons Land Corp., are well-positioned to lead the early cycle rally.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
