Market index seen climbing back to 6,600

The bellwether Philippine Stock Exchange index is expected to settle within a range of 6,200 to 6,600 by the end of 2020, factoring in a “modest recession” because of the coronavirus pandemic 2019, according to BPI Securities.

BPI Securities president Haj Narvaez said the local market could extend some of its gains into 2021 as investors start to price in the likelihood of an economic recovery.

He said while some investors were on the buy mode as stock prices dropped significantly over COVID-19 worries, investors should be ready for some volatility given uncertainties about the peaking of cases and the lifting of the lockdowns.

He said that researching and tracking stock trends and movements should be considered.

“Some sectors are probably doing better than others. Consumer manufacturing generally has been good, because there’s been a huge spike in demand for staple items. As for retail, I think a lot of retail companies derive their revenues from the supermarket-side of the business. So the near-term outlook has been positive,” Narvaez said.

The telecommunications industry also appears compelling, according to Narvaez.

“A lot of telcos have leveraged on this demand for the internet. I think strong online usage and work-from-home arrangements are generally positive for the telcos. So there’s a strong chance for telcos to outperform in the near term as well,” he said.

He said the restaurant-related business would remain challenged even after the lifting of the lockdown.

“They are still very dependent on their revenue from people dining-in and a lot of restaurants are likewise concentrated in Luzon where the lockdown has been the most stringent. And given that they are not reliant yet on deliveries and take-out, it’s going to very be hard for restaurants to compensate for the absence of open stores,” said Narvaez.

BPI Securities said oil firms needed to play catch-up as early as the third quarter because of the weak demand under the ECQ imposed in many areas of the country.

Narvaez said that assuming the market bottomed out, stocks that could outperform the greater market include conglomerates and real estate companies with strong balance sheets.