Metro Manila (CNN Philippines) — Online brokerage firm COL Financial Inc. is predicting that the Philippine Stock Exchange Index (PSEi) will end 2015 at 7,950 — about 4.22% lower than its initial forecast of 8,300.
In a press briefing on Sunday (August 2), April Lynn Tan, COL Financial vice president and head of research, said a weak earnings outlook, a possible rise in U.S. interest rates, and capital outflows led to the reduction of the company’s earlier prediction.
“While the attractiveness of China and a possible Greek default are no longer concerns, the near-term outlook for the stock market remains cautious given the challenges facing listed companies, the continued selloff of Thailand and Indonesian stock markets and the upcoming Fed rate hike in the US,” said Tan.
Despite the reduced projection, Tan assured that the market’s weakness is only temporary and that the Philippines still has “one of the best fundamental long term stories globally.”
“For example, the Philippines’ economic growth of more than six percent is expected to be faster than the average economic growth of both developed and developing economies globally in the next few years at less than 2.5 percent and 5.5 percent, respectively,” said Tan.
She added that government spending has picked up; and though the country’s exports are weak, the Philippines is not too dependent on exports to drive economic growth.
According to Tan, the Philippines has a strong current position equivalent to 4.4% of GDP due in part to the continuous growth of the BPO sector and the resilience of OFW remittances, which “makes the country less vulnerable to sharp interest rate hikes or significant peso weakness.”
The outlook of the market has deteriorated as compared to earlier this year, but there are a handful of sectors — airlines, banks, properties and power — that are enjoying a favorable near terms outlook, said Tan.
