ING sees stock index breaking past all-time high in 4th quarter

The country’s main stock index could break past its all-time high registered in February 1997, by the last quarter of this year, according to an analyst from one of the world’s biggest financial players.

Based on a study by the Internationale Nederlanden Groep (ING), the Philippine Stock Exchange Index (PSEi) could breach past its record high of 3,447.6 recorded 10 years ago.

"We believe it can break the historic record level, and that may happen sometime in the last quarter of the year when the 3,500 level will be breached," said Paul Joseph M. Garcia, chief investment officer of the ING Investment Management (IIM). IIM is the flagship investment management unit of ING and is also the trust department of ING Bank.

He said one key reason for the bullish outlook on the Philippine equities market is the rate of growth in the corporate sector, which already grew 20 percent last year and is still expected to perform at that level this year.

"Macro-fundamentals support strong corporate growth this year, where we see strong expansion. Corporates in fact have even started pre-paying their foreign and domestic debts," Garcia added.

The sectors that are expected to register outstanding performances in the equities markets are infrastructure-related activities, property sector, cement, consumer-related, and remittance-related services.

Banks with strong consumer and small-and medium-enterprise (SME) lending also have an edge, he said.

The property sector boom in 1997 may not be far in sight, ING said, adding that the record-high rental yields in the pre-financial crisis are achievable.

Regionally, ING is bullish at the stock markets of Hong Kong, Malaysia, Thailand and the Philippines. Globally, the so-called emerging markets and the Latin American region will still record high levels of growth.

The ING executive also sees Philippine gross domestic product (GDP) expanding by 5.5 percent in 2007, consistent with the bullish outlook of most investment and economic managers toward the economy.