It is expected that by the end of the year the PSE index will reach 7100 points.

The Philippine Stock Exchange Benchmark Index (PSEi) will hit 7,100 by the end of the year, according to First Metro Investment Corp. (FMIC), the investment banking arm of the Metrobank Group.

The mentioned forecast was lower than the January year-end forecast of 8100 points for PSEi.

Christina Ulang, head of research at FMIC, said the forecast was downgraded as there were “too many headwinds” that “drastically changed the picture.”

“Now we need another financial education to weather a very difficult and volatile market,” Uhlang said during a virtual briefing on Wednesday.

“We went through a period of great moderation, like the pre-pandemic, we had 6 percent GDP growth and low interest rates… the pandemic. We even had lower interest rates, BSP [Bangko Sentral ng Pilipinas] supported the economy among other things.

PSEi closed on Wednesday at 6,255.37 points, down 94.57 points from the previous close.

In February last year, PSEi peaked at 7,502 points, but it steadily fell from 11 percent to 12 percent, with trading almost reaching bear market territory of 6,000 points.

“At the beginning of the year, we predicted 8100 for PSEi, but suddenly we have Ukraine (war) where no one predicted a war in Ukraine in February. That’s when the market started adjusting and digesting a lot of news that is really hard to gauge,” she said.

Uhlang said factors that will boost the market include the new government’s announcement of continued political reforms, economic growth, infrastructure deployment and market-friendly reform measures.

EPS growth in the equity market is expected to reach 10 percent and be 17 times the price-to-earnings ratio.

In the capital markets, issuance of corporate bonds in the first half of the year already exceeded the volume of last year’s full year. According to FMIC, at current interest rates, issuance of corporate bonds may slow down in the second half of the year.

Image credits: Noni Reyes