Fund managers see gains for PSEi in 2014 despite challenges

Posted at 01/08/14 10:03 PM

MANILA – Fund managers predict that the Philippine Stock Exchange index (PSEi) will rise up to 10 or 12 percent this year after last year's 1 percent gain, taking it to 6,800.

Tere Marcial-Javier of the Bank of the Philippine Islands (BPI) and Phillip Hagedorn of Maybank ATR Kim Eng both said even if gross domestic product (GDP) growth slows to the 6 percent level, that's still fast, adding that earnings growth could remain strong.

“We've seen a lot of challenges last year, there was a big storm and prior to that issues in the political front. But if you look at the macro[economic] fundamentals, the solid fundamentals of the Philippine economy are still there. So we think that earnings will continue to grow. With the 1 percent we’ve seen from last year, I think 10 to 12 percent return should probably be in the cards,” Javier said.

Hagedorn, meanwhile, said “earnings will be positive albeit slower” in 2014.

“We’ve had record earnings many cases this year, and that’s a great base to build off of. The question is sustainability, can companies continue to make money they’ve been making on a regular basis. You know GDP growth of 6 percent still probably puts us on top of ASEAN, among probably the top of the world,” he said.

Both fund managers also said they believe the peso's recent declines will moderate or be temporary.

“In times of stress, I think relative to our Asian counterparts, the Philippine peso is in a better position to stay moderately strong relative to our ASEAN neighbors. We might see some moderate depreciation. It’s not unlikely given the strong dollar trend, but it’s not in the area that will alarm investors given the still steady inflows from BPOs and remittances,” said Javier. -- ANC