PSEI seen to hit 8,000-9,000 in 2014

BPI Securities projects the Philippine Stock Exchange index to end the year at 7,000 and surge to 8,000 to 9,000 in 2014 on expectation that the Philippine economy will sustain its growth rate of 5-7 percent in the next few years.

In a briefing during the weekend, BPI securities managing director and chief executive officer Michael Oyson said that, while the market is not going to rise in a straight line, dips present great buying opportunities as prospects remain bright.

"The reason we are positive in the economy, and why we think the economy can grow seven percent in the next few years is consumption is driving the economy and it is here to stay," he said.

Oyson noted that about 70 percent of the local economy is consumption driven while the service sector is also growing.

He said the Philippine economy is in a ''healthy golden era'' marked by healthy banks and gross international reserves while the business process outsourcing sector and overseas Filipino remittances are seen to remain strong.

"Our fearless forecast is 7,000 by yearend," Oyson said pointing out that the market has grown by an average of four percent from October to December in the last eight years.

For 2014, Oyson said "I wouldn't be surprised if we hit 8,000 and potentially 9,000. The reason is the Philippine market is not re-rated, meaning the investors are willing to pay a higher multiple for the Philippine market."

He said the market should be trading above 20 times its prices earnings multiple and at that level foreign investors would be willing to pay more for Philippine stocks since the Philippine economy is one of the few bright spots among emerging markets.

BPI Securities lead economist Emilio Neri Jr. said also said, "our main assumption in the global economy is there will be mild acceleration of growth next year" and that the US will continue to see improvement in economic performance.

Neri added that Europe is also expected to get out of contraction. So far, Europe is in a three-year contraction in GDP.

He expects the Philippine economy to grow 7 percent in 2013 while the 2014 median forecast is 6 percent and 5.8 percent for 2015. Some of the economic segments are getting saturated.

Neri said an 8 to 10 percent growth is not possible because is not building enough capacity.

Credit: Yahoo PH