Online brokerage firm COL Financial Inc. said it expects the bellwether Philippine Stock Exchange Index to trade between 7,000 and 7,800 points this year as overall investor sentiments remain weak due to heightened regulatory risks.
COL chief technical analyst Juanis Barredo said in a presentation while the market was not yet on bear territory, 70 percent of the index stocks were in the bear levels, or where share prices have fallen below 20 percent, over the past several weeks.
Barredo said one major factor that the index had not come down 20 percent from its high of 9,058 points was the performance of a few stocks, like SM Prime Holdings Inc., BDO Unibank Inc., SM Investments Corp., International Container Terminal Services Inc., Robinsons Land Corp., and JG Summit Holdings Inc. The prices of these stocks accounting for 50 percent of the PSEi have not gone down significantly.
Barredo, however, said there was also the possibility of the index rising to the 8,000-point level this year as many stocks had already reached oversold levels.
But if things remain gloomy, Barredo said the market’s worst case scenario would be the index hitting 6,800.
Meanwhile, COL Financial research head April Lynn Tan said during the same briefing while sentiments on the country’s fundamentals remained robust, certain issues like the heightened regulatory risks, environmental uncertainties and growing irrelevance of the Philippine market in the emerging market basket.
“Nevertheless we are confident that the Philippines will eventually overcome these issues and as such continue to recommend investors to buy Philippine stocks,” Tan said.
“However because we don’t know when and at what level the Philippine market will bottom, we would like to stress the importance of risk management, which can be achieved through diversification and proper asset allocation,” she added.