Philam Life sees rebound in equities

Philippine Stock Exchange. AP FILE PHOTO

MANILA, Philippines—Philam Life expects the local equities market to grow significantly in 2014, saying investors may start focusing more on the country’s strong economic fundamentals.

Rex Mendoza, president and chief executive officer of Philam, said Tuesday that the insurance firm expects the Philippine Stock Exchange Index (PSEi) to rise by 10 to 15 percent this year from its close last year of 5,889.83.

“Now is the time to make positions. At the end of the day, we all go back to fundamentals,” Mendoza told reporters on Tuesday during a reception at the Insurance Commission for insurance industry players.

The PSEi was volatile last year. After hitting the historic high of 7,392.2 in May, the main index settled at 5,889.83 on the last trading day of 2013, for a mere 1.3-percent year-on-year increase.

Financial markets last year were spooked by speculations the US Federal Reserve would soon taper its economic stimulus, particularly its monthly bond purchases worth $85 billion.

Because a portion of the stimulus package spilled over to emerging markets in the form of portfolio investments, the tapering of the stimulus was seen to cause a drop in demand for and value of emerging-market assets.

This prompted some fund owners to liquidate their assets in the Philippines and other emerging economies and go back to dollar-denominated assets.

Mendoza, however, said market reaction to the tapering would soon ease, and investors would likely revert to valuing fundamentals.

He said expectations the Philippines would sustain a robust economic growth rate of between 6 and 7 percent this year should entice portfolio investors toward peso-denominated securities.

Meantime, Philam Life, one of the biggest players in the country’s insurance sector, expects the industry to enjoy sustained growth in premium collection this year.

Mendoza said demand for insurance products was seen to rise as household incomes grow and Filipinos appreciate more the value of getting insurance.