First Metro Investment Corp. (FMIC) expects the Philippine Stock Exchange index (PSEi) to hit as high as 8,100 this year in anticipation of improved sentiment.
But share prices and the peso ended lower yesterday amid continuing concern on the new coronavirus disease 2019 (COVID-19) pandemic that drags investor sentiment.
The PSEi was down 54.98 points to 7,085.69, a 0.77 percent drop.
The broader all shares index was down 24.42 points to 3,775.46, a 0.64 percent drop.
Losers edged gainers 105 to 82 with 43 stocks unchanged. Trading turnover reached P6.91 billion.
Claire Alviar, analyst at the Philstocks Financial Inc., said the drop comes as the Philippines gets placed under critical risk classification regarding its COVID-19 situation.
Alviar said the COVID-19 Omicron variant is sending worries to investors.
First Metro president Jose Patricio Dumlao said PSEi’s uptick this year is anchored on projected 6 to 7 percent growth of the economy this year.
The growth will be driven by sustained domestic demand, easing inflation, election expenditures and accelerated government spending on infrastructure projects, according to Dumlao.
“Our external position remained robust, supported by manageable external debt, steady US dollar inflows from remittances and BPOs (business process outsourcing) and high gross international reserves,” he said.
FMIC said interest rates will have an upward pressure with government borrowing and US Fed actions, tempered by moderating inflation.
Cristina Ulang, First Metro head of research, said corporate earnings are likely to increase by 35 percent this year from 28 percent in 2021, translating to a price-to-earnings (PE) ratio of 16.9x.
Overseas Filipinos’ remittances are expected to grow 4 percent this year.
Inflation, expected to pick up due to higher crude oil and food prices, will remain transitory and eventually slow down and average between 3.5 and 3.7 percent this year.
FMIC said the peso will continue to depreciate slightly due to the strength of the US dollar and balance of trade deficit, averaging between 51-52 for the year.
At the bourse, most actively traded Solar Power Nueva Ecija Corp. was up P0.04 to P1.33.
Ayala Land Inc. was down P0.05 to P34.45. SM Investments Corp. was down P10 to P930.
Metropolitan Bank and Trust Co. was up 0.60 to P55.80. Puregold Price Club Inc. was down P0.55 to P36. Ayala Corp. was down P27 to P833. GT Capital Holding Inc. was up P4.50 to P532.50. Globe Telecom Inc. was up P60 to P3,300. Monde Nissin Corp. was down P0.24 to P15.68. AC Energy Corp. was down P0.49 to P9.15.
The peso closed at 51.14, down from 50.96 on Monday.
The currency opened at 51.25 and hit a high 51.07 and a low of 51.275. Trading turnover reached $1.22110 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. , said the weakening of the peso happened amid reports that the central bank participated in the local foreign exchange market.
The peso’s fall missed a broader rally as the country’s imports continued to outpace exports in November, taking its trade deficit to $4.71 billion.
“With global crude oil prices staying elevated at the start of this year, the Philippines could continue to experience large trade deficits in the near term…and pressure on the peso to weaken should persist in 2022,” said Nicholas Mapa, senior economist for Philippines at ING.
