Online brokerage firm Colfinancial.com expects the Philippine Stock Exchange index to hit 8,300 this year on prospects of recovery that would perk up the market.
The Philippine Stock Exchange (PSE) meanwhile said local investors have dominated trade in the local stock market the past eight consecutive months, eclipsing foreign funds’ participation. Foreign funds normally take the bulk of trading turnover in the PSE.
April Tan, Colfinancial.com head of research, said the question is how fast the economy recover after 2020’s slump due to the new coronavirus disease 2019 pandemic.
The economy contracted 9.5 percent as result of dampened economic activity due to the pandemic, exacerbated by weak government response.
Tan said companies are expected to post a 39-percent profit growth for the year. This makes the stock market attractive relative to investing in bonds.
The local equities market is also expected to benefit from the rotation of investment funds in emerging markets, said Tan.
The PSE said for January, local investors, both retail and institutional, accounted for 75.3 percent of value turnover, the PSE said. This is the highest local investor participation on a monthly basis since March 2010 at 76.2 percent.
“The value turnover ratio was 56.8 to 43.2 in favor of foreign investors in January 2020 and 54.6 to 45.4 in favor of local investors for the entire 2020,” the PSE said.
Also in January, the daily average value turnover reached P11.04 billion, up from P7.35 billion as of end-2020 and P6.13 billion as of end-January 2020.
The stock market posted a total turnover of P220.85 billion for January, up from P128.76 billion last year.
“This is the eighth consecutive month that locals outpaced foreign investors in terms of value traded in the stock market. Trading activity of foreign funds may have abated but liquidity in the stock market has not deteriorated. In fact, daily average value turnover is up 50.3 percent year to date and 82.4 percent year on year,” said Ramon S. Monzon, PSE president.
Retail investor participation in the stock market also continued to grow, according to Monzon, with retail investors accounting for 52.2 percent in January.
“The remaining 47.8 percent of amount traded came from institutional investors,” he said.
“Retail participation started to expand when the pandemic started. In 2020, the retail market was responsible for 26.9 percent of value traded from 18.2 percent in 2019. Initial public offerings usually serve as the entry point in the stock market of retail investors. We hope to have a robust IPO pipeline this year, including Real Estate Investment Trusts, to further grow the retail market,” Monzon said.