Retail stock broker COL Financial Inc. said the benchmark Philippine Stock Exchange index (PSEi) may still end the year at 7,500 points, higher than the level it reached prior to the start of the Middle East war.
April Lynn Tan, the company’s chief equity strategist, said Monday that at that level, the valuations of the market are still ‘very cheap,’ assuming a 12 times price-to-earnings (PE) ratio.
‘Because one of the things that the analysts do, for example, when we usually come out with a target, we look at the historical average PE, and then multiply it by the EPS [earnings per share],’ she said.
‘At that level, at that multiple, we’re at 7,500, which is the 2024 level. So, I feel like it’s still a bit average. So, even fundamentally, that is the target, if we were to just target the minus 1 standard deviation.’
The initial public offering of GCash parent Mynt Inc. has made COL more optimistic about the prospects for the market this year.
While oil prices are rising again, Tan noted that these are ‘very close’ to pre-war levels, with the Means of Platts higher than the pre-war levels by 44 percent two Fridays ago.
‘Compared to the increase of 160 percent as one point in time, it is significantly below the peak.’
Juanis Barredo, the company’s chief technical analyst, said the main index is ‘just some points away’ from 6,600, the level of the PSEi when the war broke out.
The PSEi closed Monday at 6,415.72 points.
‘It’s the second one that might be more difficult, the one that’s closer to 7,500. Can that work itself? Like I said, that’s possible. But I gave it about a 20 percent to 25 percent chance we’ll go back there.’