After 4-year downturn, stock market recovery seen to come this year

MANILA  —After four years in the doldrums, the Philippine Stock Exchange (PSE) expects local equities to regain ground this 2024 due to easing monetary policy stance and the continued revving up of the economy postpandemic.

PSE president and CEO Ramon Monzon, in a statement, said the local stock barometer may trade within the 6,800 to 8,300 territory this year, banking on analysts’ optimistic outlook.

The range suggests a projected Philippine Stock Exchange Index (PSEi) upswing of at least 5.4 percent to as much as 28.7 percent this year.

“The expected rate cuts by the US Federal Reserve and Bangko Sentral ng Pilipinas, as well as Philippine government’s aggressive spending on infrastructure projects and continued increase in foreign investment pledges are expected to stimulate consumption, generate job opportunities and encourage additional investments,” Monzon explained.

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On Friday, the PSEi fell by 1.06 percent to close the year 2023 at 6,450.04. The main index dropped by 1.77 percent last year from 6,566.39 in 2022.

The PSEi had also gone down by 8.63 percent in 2020, 0.2 percent in 2021 and 7.8 percent in 2022 as the pandemic lockdowns hurt corporate earnings.

The last time that the PSEi ended in positive territory was in 2019, albeit with just a modest 4.7-percent gain.

At the same time, the PSE expects capital-raising activities to hit P175 billion in 2024 or about 24 percent more than last year’s level.

Some P40 billion will come from six slated initial public offerings, beginning with the listing of Citicore Renewable Energy Corp. The P12.9-billion offering by the solar energy producer is scheduled in March.

READ: Citicore Renewable kicks off 2024 IPO season with P12.9-B offer

In 2023, about P140.95 billion in new capital was raised through the PSE, 27.8 percent more than P110.29 billion generated in 2022. Total market capitalization of listed companies rose by 1.1 percent to P16.74 trillion last year.“Risks to the positive outlook next year remain such as the potential impact of higher transport charges, electricity rates and international oil prices,” Monzon warned.

No big bang in first week

For this week, Philstocks Financial Inc. senior research analyst Japhet Louis Tantiangco said that “investors may start 2024 still on a cautious note as there remains no catalyst for the local bourse.”

“Investors are expected to watch out for upcoming economic data for clues, primarily our inflation rate for the month of December,” he added.

Tantiangco explained that a lower inflation print could give the market a boost. Inflation was at 4.1 percent in November.

He pegged the support level for the PSEi at 6,400 and resistance level at 6,700 this week.

Regina Capital Development Corp. head of sales Luis Limlingan said investors could take cues from Wall Street, which has seen some optimism.

US markets registered strong 2023 performance with S&P500 up 24.6 percent and DJIA up 13.8 percent, he noted.

READ: History shows strong 2023 could keep US stocks on path for 2024 gains

The best performer was Nasdaq Composite with 44.2-percent gain for the year, Limlingan added. After the long weekend and New Year holiday, light trading volume is expected with only four days of trading.

“The first trading week may see some consolidation as the market attempts to build a base for its next leg up. Barring data that throw off current rate cut expectations and economic growth assumptions, we think investors should start hunting for good bargains in our stock market,” China Bank Capital Corp. managing director Juan Pablo Colet added. INQ