PSEi seen hitting new high

The main-share Philippine Stock Exchange index will likely climb to a new high before the Chinese New Year and head toward 5,000 for the rest of 2012 on the back of a double-digit corporate earnings growth, a local fund manager said.

Gus Cosio, president of First Metro Asset Management Inc., said in an interview that the local market was getting underlying support from the so-called upbeat “January effect,” which could propel the local stock barometer to a new high this week or next.

His “fearless forecast” is that the all-time high close of 4,550 could be breached before the Chinese “Year of the Dragon” which starts on January 23.

The PSEi last peaked in early August last year. During the first trading week of 2012, the index gained by 2.5 percent to close at 4,483.36 on Friday, although there was some profit-taking shortly before the weekend.

January is a seasonally strong period for equities as many investors take fresh position for the year ahead, plowing back some of the funds unloaded for window-dressing purposes at the end of the previous year.

Cosio said this view was supported by the string of favorable economic data coming out of the United States recently alongside the recovery of the US banking system. While Europe was still in a challenging situation, he noted, “What else is new?”

The Philippine economic environment, he said, was also providing impetus for upbeat equities trading given the anticipated monetary easing by the Bangko Sentral ng Pilipinas which, in turn, would result in a stable low-interest regime.

The index rise to about 5,000, Cosio said, would be supported by a prospective growth in average earnings per share of 15-16 percent. This would translate to a price-to-earnings (PE) ratio of about 14 to 15x.

Index heavyweight Philippine Long Distance Telephone Co., the fund manager said, could climb to about P3,000 per share or near the P3,400 peak in 2007. Even at P3,000 per share, Cosio said PLDT’s dividend yield would still be at about 6 percent, or better than long-term bond yields.

PLDT, which has a 16.28-percent weight on the index, closed at P2,654 per share on Friday.

For this year, Cosio sees a lot of upsides from the mining, gaming, consumer, infrastructure and banking sectors.

FAMI has Oriental Peninsula Resources Group (ORE) and Nickel Asia Corp. in its portfolio while NiHao Mineral Resources International Inc. is among Cosio’s personal picks.

In gaming, FAMI favors Leisure & Resorts World Corp., the partner of Belle Corp. in its upcoming casino/tourism complex along Manila Bay.

On the consumer sector, Cosio is upbeat on retailing firm Puregold Price Club Inc. and Tanduay Holdings Inc.