MANILA, Philippines—The Philippine benchmark index could gain about 13.7 percent to 6,700 this year, as investors are seen returning in the latter half of the year after a volatile first semester, officials from Gaisano-led investment house AB Capital said on Thursday.
The gains would come even as current valuations were deemed higher than historical standard at about 16 times 2014 earnings, said Jose Vistan, head of research at AB Capital Securities, in a briefing.
Worries over a reduction by the US Federal Reserve of monetary stimulus cut the gains of the Philippine Stock Exchange Index last year to about 1.3 percent.
Vistan said, however, that the still-high valuations were backed up by strong economic prospects, with the Philippines on track to grow about 6 percent this year, the second-fastest in the region behind China.
Corporate earnings are also seen to grow by 7 percent this year.
He said the market would trek higher in the second half as investors look toward faster growth, in terms of the economy and businesses, in 2015.
Vistan added that this year would be the opposit eof last year in that the first half would see stocks moving sideways before finishing the year strong.
He added that the market was currently in consolidation with support seen around the 5,800-level.
For 2015, technical indicators suggested an upside to about 7,800 for the PSEi, Vistan noted.
AB Capital, whose equity unit investment trust fund was named the best performer in 2013, said it favored consumer, property and gaming stocks.
Among its consumer picks were Andrew Tan-led companies Emperador Inc., a liquor manufacturer, and Travellers International Hotel Group Inc., which operates Resorts World Manila, as well as beverage firm Pepsi Philippines.
Tan’s holding firm Alliance Global Group Inc. and Gokongwei-led JG Summit Holdings were among the list for conglomerates.
Defensive dividend-paying stocks were good choices, Vistan said, led by Philippine Long Distance Telephone Co.
BDO Unibank Inc. and property firm SM Prime Holdings, both owned by billionaire Henry Sy, were also among AB Capital’s picks. Other Sy-affiliated companies that made the list were Atlas Consolidated Mining and Development Corp. and Megawide Construction Corp.