Good time to hunt for bargains in the PSE, says analyst

The local stock market is likely to remain in the doldrums this year, but for investors with a longer investment horizon, it’s a good time to pick up bargains, local stock brokerage AB Capital Securities said.

On Wednesday, the main-share Philippine Stock Exchange index (PSEi) fell by 90.43 points, or 1.43 percent, to close at 6,236.40 as the market priced in the sharper-than-expected first quarter Philippine economic contraction and the latest rebalancing of closely tracked MSCI Indices.

In a market briefing, AB Cap assistant vice president and deputy head of research Lexter Azurin expressed confidence that the local market will bounce back as soon as the domestic COVID-19 contagion is contained.

AB Cap downgraded its PSEi target this year to 6,850 from its outlook of 7,600 at the start of the year as the previous forecast had assumed that Philippine gross domestic product would grow by at least 6.5 percent this year.

In the first quarter, Philippine GDP contracted by 4.2 percent year-on-year, sharper than the consensus decline of 3.2 percent.

The new PSEi outlook for this year suggests a decline of 289.71 points, or 4 percent, from last year’s finish of 7,139.71.

On the latest MSCI rebalancing, Azurin noted that PSEi companies Puregold, Megaworld and Aboitiz Power would likely see some foreign outflows as these had been stricken off the closely tracked MSCI Global Standard Index.

On Wednesday, Puregold, Megaworld and Aboitiz Power fell by 2.8 percent, 5.37 percent and 2.74 percent, respectively.

“However, we view the significant drops as a huge buying opportunity at a one to two-year time horizon,” he said.

—DORIS DUMLAO-ABADILLA