Will PSE index reach 9,000 by 2016?

MANILA – Can the Philippine Stock Exchange index (PSEi) reach a high of 9,000 leading up to the 2016 national elections?

Ismael Cruz, president of IGC securities, said that based on PSEi data on the past six national elections since 1998, the market gained an average of 25 percent during election years.

But excluding the 1998 and 2001 election years—when market was down 14 and 3.6 percent, respectively—the market gained an average of 41 percent.

Citing the PSEi data, Cruz said for the 2004 elections, the market was up 45 percent; 34 percent for the 2007 elections; 49 percent for the 2010 elections; and 41 percent for the 2013 elections.

“If you want to apply the 25 percent minimum return on election on this 7,200 index, we will be at 9,000,” Cruz told ANC on Tuesday.

“Unbelievable, but that’s what the statistics say…I’m hopeful that this will happen,” he added.

The PSEi dropped to a five-month low 7,200 on Tuesday, but Cruz said the Philippine market is still in a “bull market,” and he expects the index to climb up by the third quarter of the year.

“We didn’t expect this kind of correction. It is a very sharp correction, it’s about 12 percent from the peak that we hit about early April when we are marking 8,136,” Cruz said.

“These are not good times for the market but we continue to be very confident because of our strong fundamentals in the market. We feel that what is happening is the Philippines is caught in a contagion. This contagion is the outflow of funds from emerging markets including Southeast Asian markets,” he added.

He said "when the dust settles," flows will come back to the
Philippines driven by its strong fundamentals.

source: www.abs-cbnnews.com

PH stocks expected to sustain growth in 2015

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) is expected to sustain its growth next year at 8350, supported by an improving US economy and 16 percent corporate earnings growth forecast.

Ismael Cruz, president of IGC Securities, says low inflation, cheaper oil and pre-election year will also boost Philippine stocks next year.

"For next year, we're seeing the seventh year of the bull run, that's a record and we're predicting an index of 8,350. This is based on an earnings growth continuing at 16 percent," he said.

"The best way to estimate the equities market gain is earnings growth. We saw 16 percent last year and our forecast this year is that it will continue at 16 percent. When that happens and as it is forecast now, the impact is on our P/E. We're always quoted as most expensive market at 20 times P/E, but if you factor in 16 percent growth, the 20 times P/E goes down to 17," he added.

Cruz also expects the Philippine economy to grow 6 to 7 percent next year, but still below the government's forecast due to the government's underspending.

But he expects government to improve infrastructure spending in the next two years.

"It's been government expenditure that has been very weak. In fact, in the third quarter, it's negative 2.6 percent. In the first half, it was up only 0.9 percent. So the reason why we have a slower GDP is really underspending on the part of government... I think from the reports from seeing the infrastructure and 12-14 PPP projects well-positioned to be launch in next 2 years," Cruz said. - ANC

source: www.abs-cbnnews.com