PSEi projected to end 2023 at 7,800

SM Investments is deemed an ideal proxy for the country’s recovering consumer economy.

MANILA  -Maybank Securities Philippines sees further upside for local equities as it revealed its latest stock picks and outlook for the year.

For 2023, the stock brokerage house expects the benchmark Philippine Stock Exchange Index (PSEi) to close the year at 7,800, which translates to an 18-percent gain from its 2022 close.

This would also be supported by corporate profit growth of 13 percent this year after earnings in 2022 came within or above expectations.

Jacqui De Jesus, head of equity research at Maybank Securities, cited SM Investments Corp., International Container Terminal Services Inc., Bloomberry Resorts Corp., SM Prime Holdings Inc., BDO Unibank Inc., Universal Robina Corp., Globe Telecom and Aboitiz Power Corp. as their top stock picks.

Companies in their environmental, social and governance basket were SM Investments, Bank of the Philippine Islands and ACEN Renewables Corp.

She said SM Investments was an ideal proxy for the country’s recovering consumer economy.

“As the holding company of the country’s largest bank, mall operator and retailer, we expect the general impact of inflation to be muted for SM, given its largely essentials-based product portfolio, cost-plus pricing model of its retail segment, low exposure to oil-driven costs, and minimal non-Philippine peso exposure and predominantly fixed-rate debts,” De Jesus said.

Maybank Securities also maintained its positive outlook on the Philippine banking sector.

De Jesus said that the industry “has shown healthy liquidity indicators: liquidity coverage ratios are above 100 percent; loan-to-deposit ratios are below 85 percent; the banks under our coverage are more than compliant with capital ratio requirements.”

Dr. Zamros Dzulkafli, economist at Maybank Investment Banking Group, said their outlook was also supported by strong private consumption and the continued recovery of tourism, especially after the reopening of China.

Maybank is forecasting the Philippine economy to expand by 5.5 percent this year and 6.2 percent in 2024. While slower than the 2022 gross domestic product of 7.6 percent, this would still position the Philippines as one of the fastest growing economies in the region, it noted.

Headline inflation in 2023 was forecast at 5.9 percent while it flagged concerns over “sticky” core inflation.

“Inflation drivers shifted from transport costs in early last year to food and services sectors in the [second half of 2022],” according to Maybank Securities. “The nonmonetary measures in place should help contain further upward pressure in food prices.” INQ