With a still better macroeconomic outlook, the Philippine Stock Exchange index (PSEi) continued to climb in February this year, but fell short of reaching “bull territory” or the 7,000-point level.
The two major positive factors that led to the PSEi’s sustained climb in February is the better gross domestic product (GDP) outlook for this year, and the inflation rate slowing down to 2.8 percent in January.
A third factor improving investor sentiment are listed companies reporting improved incomes for 2023.
For the month of February, the PSEi averaged 6,824 points, which is 3.43 percent higher than the 6,607.85 points of January. The highest close of the PSEi in February was 6.944.71 points while the lowest was 6,623.01 points.
On a yearly comparison, the PSEi average for February (6,824 points) was only 0.11 percent higher than the 6,816.43-point average of February 2023. However, in February last year, the PSEi’s highest close was 7,035.76 points, and the lowest close was 6,556,20 points.
Inflation rate boosts investor sentiment
It was on February 6, 2024 that the Philippine Statistics Authority (PSA) announced that the inflation rate for January was 2.8 percent, or lower than the 3.9 percent of December 2023. Also, the January inflation rate was the lowest recorded since the 2.3 percent in October 2020, the PSA said.
Analysts said that the lower January inflation rate was also within the 2- to 4-percent inflation projection of the Bangko Sentral ng Pilipinas (BSP).
“Investors cheered the inflation data for January, which came in at 2.8 percent. The said data settled at the lower end of the Bangko Sentral ng Pilipinas’ inflation projection for the month. It was also the second straight month wherein inflation fell within the government’s target range of 2 (percent) to 4 percent,” Philstocks Financial, Inc. research and engagement officer Mikhail Plopenio said Tuesday.
“(U)nlike the unexpected inflation rate spike in the US, the Philippines inflation rate was easing and still within the expectations, leading investors to look forward to the meeting of the BSP,” Philstocks Financial, Inc. assistant research manager Claire Alviar said.
The lower January inflation figure resulted in the BSP maintaining policy rates steady in February.
Reporting of income growths
The month of February also saw big listed companies reporting significant income increases for 2023, which helped boost investor sentiment. Among these are:
– Ayala Land Inc. (ALI) 2023 net income reached P24.5 billion, up 32 percent from 2022;
– Bank of the Philippine Islands (BPI) 2023 net income grew by 30.5 percent to P51.7 billion from 2022’s P39.6 billion;
– Filinvest Land Inc. (FLI) 2023 net income attributable to the parent company’s equity holders rose 30 percent to P3.77 billion from P2.9 billion of 2022;
– Megaworld Corp. 2023 net income reaches P19.4 billion, up 26 percent from 2022’s P15.4 billion;
– MREIT Inc., the real estate investment trust of Megaworld Corp., recorded a distributable income of P2.8 billion in 2023, up 13 percent from the P2.5 billion of 2022;
– Metropolitan Bank & Trust Co. (Metrobank) 2023 saw its net income last year accelerate by 28.9 percent to P42.2 billion from 2022’s P32.8 billion;
– Philippine National Bank (PNB) 2023 net income rises 55 percent to P18 billion from 2022.
Outlook for next months
Stock market investors will be awaiting the inflation figures for the next months, or if it will still be within the 2 to 4 percent target of the BSP.
Also, investors are excited over when the BSP will lower its policy rates, which will help boost expansion of businesses and consumer spending.
And while the PSEi still failed to reach the 7,000-point “bull territory,” there is still much optimism the stock index will surpass that level as GDP growth this year is forecast at 6.5 to 7.5 percent.
COL Financial chief equity strategist April Lynn Tan said in a media briefing in late January that the PSEi can reach as high as 8,200 points this year because of good economic growth prospects for 2024.
“The bottom-up index target is 8,200, much more bullish. We are positive, or even if I’m like a little bit cautious in the short term, I’m still positive over the long term because my feeling is if the market sentiment improves, everything normalizes,” she said.
For this year’s economic growth, the International Monetary Fund (IMF) in its World Economic Outlook released in late January revised upwards its GDP projection for the Philippines this year.
“Real GDP growth for 2024 was revised up slightly to 6.0 percent from the October 2023 WEO forecast of 5.9 percent, reflecting slightly stronger than expected recovery in investment and exports,” IMF resident representative to the Philippines Ragnar Gudmundsson said.
“GDP growth is expected to remain at around 6 to 6.5 percent over the medium term, making the Philippines one of the strongest performers in the region and globally,” he said.
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