Monday, 5 November 2012

Fearless Forecast: PSEi At 10,000


By JAMES A. LOYOLA
Manila Bulletin
http://www.mb.com.ph/articles/379968/fearless-forecast-psei-at-10000#.UJd5rG_Mgko

Online brokerage firm COL Financial, formerly Citiseconline.com, expects the Philippine Stock Exchange Index (PSEi) to hit 10,000 by 2016, almost double the current level.

According to COL Financial president Conrado Bate, they are optimistic that the fearless forecast will happen because, “for the first time in the history of the Philippines, we enjoy a credit rating which is just one notch below investment grade.”

He noted that this is a consequence of the steady improvement in the country’s finances. This includes the country’s foreign exchange reserves which have increased 5 times since 2005, thanks to the strength of remittances and the business process outsourcing sector.

“Our fiscal deficit is a mere 2 percent of GDP (gross domestic product) while inflation has remained under control. Compared to our Asian neighbors, we are also less vulnerable to developments in the US, Europe and China since we are the least export dependent, with domestic consumption accounting for 70 percent of GDP,” said Bate.

He added that the outlook for domestic consumption is also very favorable by 2015, the Philippines will enter what is commonly known as the “demographic sweet spot,” the period where half of its population will be of working age.

“There are also several developments that make us excited about the near future. Investment opportunities are becoming more tangible as the government’s Public Private Partnership projects are gaining momentum,” said Bate.

Meanwhile, he said a solution to the Mindanao problem seems to be at hand, noting that this would add another growth driver to the Philippine economy which in the past had to depend on the islands of Luzon and Visayas for growth.

“As stock market investors, we have this wonderful opportunity to participate in the country’s economic growth, and we believe one of the best ways to partake in this is by investing in the country’s top conglomerates who are poised to invest and grow in our economy,” said Bate.

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