2016 a make or break year for PSE, says BPI trade chief

MANILA, Philippines - The Philippine stock market is bound to make or break next year as it prepares to digest a change in the country’s political landscape, the head of the online stock brokerage arm of the Ayala-led Bank of the Philippine Islands (BPI) said.

“It’s not yet doomsday but 2016 is an important year for the market. We are currently experiencing the happy hour and next year will determine if the happy hour will lead us to the main party,” BPI Trade chief executive officer Mike Oyson told The STAR.

Oyson said investors react to a positive outlook toward the government which is why electing the right president next year is critical.

“The market does very well during election year but what happens after that is the question. At present, outlook is still very positive,” he said.

Oyson said the market is currently overvalued at the 7,800 level which is why it may have a hard time sustaining growth once it enters the 8,000 to 8,400 level.

To continue the bull run, Oyson said a smooth political succession should be partnered with the continued economic growth of above six percent.

The Philippine Stock Exchange index (PSEi) on Monday managed to breach the 8,000 mark for the first time with a new all-time intraday high of 8,007.98.

With the PSEi already flirting with the 8,000 mark in just the first quarter of the year, First Metro Investment Corp. chairman for capital markets development committee Roberto Juanchito T. Dispo said his group’s yearend target remains unchanged at 8,300 to 8,500.

“Investors’ sentiment will likely stay positive given supportive macro factors.  We see pullbacks (similar to the late February) as opportunities to increase exposure.  But the direction will be determined by US dollar-Philippine peso exchange rate. We reiterate our preference towards modern retailers, power generation sector and gaming,” Dispo said.

From an outsider’s standpoint, Andrew Stotz, chief executive officer of foreign fund manager A. Stotz Investment, said in an earlier interview that the local market may be able to sustain its growth in the next one or two years but may due for a correction afterwards.

“Philippines could have 10 more years of economic growth but that doesn’t mean they’re going to get great share price growth. You know there’s a difference between economic growth and stock market growth. So be very careful about linking those two together. Sometimes it is right, sometimes it’s not,” Stotz said.