PSE seen at 8,000 before year’s end

The Philippine Stock Exchange index (PSEi) is expected to close the year between the 8,000 and 8,300 level on the back of the country’s strong macroeconomic fundamentals, even amid its roller-coaster ride.

A joint report by the First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) noted that the market turbulence would likely “become a regular occurrence in the interim or until we see investors’ confidence improve.”

“Upcoming Q2 [second quarter] 2015 GDP [gross domestic product] and earnings data is paramount to investors on whether rich valuations can be sustained,” the Market Call said.

The country’s GDP slowed down to 5.2 percent in the first quarter of 2015 from last year’s 5.6 percent, due to lower net exports and slower growth in fiscal spending.

“However, important drivers of growth [household consumption and investments] remain intact and suggest 2015 GDP growth is unlikely to deviate from the 6-percent level,” it said.

The report said the recent market’s drop presents an investment opportunity to increase exposure.

“But we prefer to wait for tactically more attractive entry points as we see no significant catalysts that can boost the market in the interim. Low liquidity and fragile investors’ confidence may lead to steeper declines,” it said.

The FMIC and UA&P identified preferred sectors, namely modern retailing, power and oil refiners.