FREE Commentary: PSEi has given up all gains this year

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Back to end-2023 level

The PSEi has given up all gains for the year as the index fell back to its end-2023 level of 6,450. In USD terms, the market is actually down 3.5% already given the weaker local currency.

At 6,450, the market trades at 11.2x P/E current and 9.9x P/E forward. This way below the market’s historical valuation – 5-year mean P/E of 12.4x and 10-year mean P/E of 12.8x.

All sectors are now trading lower year-to-date (YTD), with the exception of Banking stocks which managed to hold on to most of its gains and sustain its outperformance.

Peso depreciation also not good news

Foreign investors have been consistent net sellers lately trimming down total net inflows to just US$100 million YTD. Coincidentally, the PHP/USD rate fell to the key P57.00 level for the first time since Nov 2022.

Apart from having a positive correlation with local equities, a weaker dollar poses additional inflation risk for the country given that we are a net importer economy.

Negative for Consumer and Conglomerate stocks

As mentioned in our other Commentary report, a weaker PHP is generally negative for Consumer and Conglomerates but neutral-to-positive for Properties and Power.

Our current index target of 8,300 now offers much higher potential upside of almost 29%.

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