Stock market investors will see renewed challenges in the second quarter of 2016 despite the election-related boost, given the still uncertain picture developing overseas.
The benchmark Philippine Stock Exchange Index (PSEi), which gained about 4 percent in the first quarter to end at 7,262, may likewise see some correction, especially in the early part of this period.
Analysts polled by Inquirer Business pointed to slowing economies worldwide and expensive domestic valuations, but also noted opportunities especially if corporate earnings beat expectations.
“The start of the year proved to be very difficult as the market declined to almost touch the psychological 6,000 level on the back of declining oil prices, lackluster economic data indicating slowdown in key countries as well as the US Fed’s stance to tighten policy rates,” PNB Securities president Manuel Lisbona said in an e-mail.
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For the second quarter, the PSEi may test anew the 7,000 to 6,900 level given that the market is still trading at about 20 times its price to earnings ratio, he said.
Manny Cruz, equities strategist at Asiasec Equities Inc., also pegged the projected support level at 6,800 to 7,000 with a “target upside” of 7,650. That forecast assumes that first quarter 2016 corporate earnings and the country’s economic growth would beat expectations and the May elections will remain untainted.