Another tough year for PH stocks? Analyst sees PSEi at its worst at 5,700

Stock market investors were advised to stay on guard as storm clouds swirling around the global economy linger, dampening the outlook for 2023.

Elevated inflation and the high interest rate regime in the Philippines would also persist through the year, driven by further efforts to reopen the economy and low unemployment.

“There are rays of hope but there’s still an overcast,” Jonathan Ravelas, a veteran stock market analyst and financial strategy consultant at e-Methods for Business Management Corp., told the Inquirer.

Other risks could arise from the Russian invasion of Ukraine, renewed fears over another COVID-19 surge and the likelihood of a global recession.

“These linchpins can still undermine the recovery,” Ravelas said.

For 2023, Ravelas saw a “base case” scenario for the Philippine Stock Exchange index (PSEi) at 6,850—a modest 4-percent upside from the 2022 close.

His best and worst case scenarios were 5,700 and 7,000, respectively.

“Government needs to insulate the economy and ensure that growth is there,” Ravelas said.

“One opportunity I see is if government really identifies the infrastructure spending [priorities],” he added.

This could help push up gross domestic product growth from his base case forecast of 6.5 percent for the year.

“We are not immune to global risks,” Ravelas said as he advised investors to also focus on resiliency.

“We have to face the reality [that] we have to build our resiliency,” he said.

In a separate report, Singapore’s DBS Group Research  and First Metro Securities Brokerage offered a more conservative outlook, tagging the Philippines as among the regional losers especially in the latter part of 2023.

It assigned the Philippines a “negative” outlook with the PSEi ending at 6,700.

DBS-First Metro also noted stock market gains this year would be capped by outflows from passive funds during bear market rallies. It also warned of “overly optimistic” earnings forecasts.

“Our concern is that consensus earnings projections appear too high and need a reality check. We are of the view that the street is underestimating the impact of the pace and magnitude of policy tightening on earnings in the next 12 months,” DBS-First Metro said.

“This is given that the latter half of 2023 will tell a different narrative as we see factors that could challenge earnings momentum,” DBS-First Metro added. INQ