Philippine Stock Market Research

January 8, 2017

Quantifying the PSEi’s Stability and Vulnerability in 2017

We quantified the PSEi’s stability and vulnerability in our Special Report this week.  Yes, it can be done in three stages of dissection.  Remember that the PSEi is a basket of 30 stocks representative of the Philippine economy.

To view it in another angle, the PSEi can actually be compressed from 30 to just 15 groups or conglomerates representative of the Philippine economy.  Two groups notably make up almost half of the PSEi, and five groups notably make up 72% of the PSEi.  These are the stocks that have to be really covered to see the direction of the PSEi.

The 30 PSEi stocks have businesses negatively affected by factors adversely affecting the economy in 2017 such as Trump’s protectionist policies, the weak peso and higher interest rates.  They also have positive or stable businesses that can weather these threats.

Through this, the 30 PSEi stocks’ businesses are broken down into positive and negative businesses to quantify the PSEi’s percentage of stability and vulnerability to these threats.  The results are interesting and pinpoint positive stocks to invest in and negative stocks to avoid in 2017.

Going further from this, we estimated the PSEi’s potential downside from its stock components’ negative businesses through a range of net income decreases should the threats against the PSEi materialize.  These ranges can be investors’ tools to see if the PSEi has been oversold by market fear.

Lastly, there are four PSEi stocks with positive businesses that are trading at a bargain.  They can strengthen investors’ stocks portfolios for 2017.


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