Stockbroker BDO Securities Corp. said the benchmark Philippine Stock Exchange index may close the year at 7,500 points as sentiments may improve despite the lingering fears caused by global headwinds.
Chiw said a “nagging concern” over inflation, interest rate and global growth, stymied the stock market’s rise in the early part of the year with the main index dropping to the current levels of 6,600 points from a high of 7,100 points in January.“This is really because of the shock we had during January and February when our inflation came out to be higher than 8 percent. So that affected the market because they think that interest rates will continue to be higher for a longer period of time.
“And also because of higher interest rates, investors right now are putting more of their money in fixed income or bonds securities because this type of security is already giving them very good returns at 6 percent or 7 percent, whereas the earnings yield for the PSEi is just about 7-6 percent. Not much difference but the perception is equities is riskier. So, they go with the safer bonds or bond instruments or government securities,” Chiw said.
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