The First Quarter 2014 Philippine Stock Market Report

4M14 Uptrend Roadblock Ahead

The PSEi was in an uptrend in 4M14 with corrections and rallies building the upward trend-line in 2014 year-to-date.  The PH10YTN rate jumped to the 4% level but remained stable at lower levels prompting investors to choose stocks over fixed income securities.  Inflation inched up but was still at low levels.  Growth was also still present, and there is enthusiasm in the air with the weak peso promising strong corporate earnings for most listed companies.  With the uptrend, the PSEi PER reached the 20x level once again making the Philippine market one of the most expensive stock markets in the world.  7,000 is a big possibility, but corporate earnings must justify sustainability at that level.  As mentioned in the year-end 2013 quarterly report, three quarters worth of earnings might ease the PSEi PER.  Upcoming 1Q14 earnings are still the second batch of quarterly earnings coming from 4Q13, and it looks it won’t be enough to ease the PSEi PER significantly.  The PSEi likewise follows the US market’s direction.  The Dow and S&P 500 have a long ways to go, but the PSEi doesn’t.  6,700 to 7,000 is seen as a precarious level to continue positioning in the Philippine stock market, but buying will be buoyed by enthusiasm for 1Q14 earnings.

PSEi 4M14


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