Now that the Philippine Stock Exchange index (PSEi) has pierced the 7,000-point level to enter “bull territory,” the most logical question to ask now is: Will the PSEi hit 8,000 points soon?

It was on September 12 that the PSEi returned to the 7,000-point territory to close at 7,024.87 points, marking the first time in 19 months that the stock index returned to bull territory.

And on September 16, the stock index logged its highest close this year at 7,175.36 points but dipped due to profit-taking to close at 7,155.90 on September 17.

The stock index returning to the 7,100-point level was already foreseen by analysts this year.

One of those analysts who saw that happening was COL Financial chief equity strategist April Lynn Tan.

“Philippine stocks could finally enter a bull market this year as the outlook for economic growth looks bright, and as stocks are cheap and underowned,” she said in a media briefing in January this year.

She said at that time that lower inflation and interest rates will propel consumer and investment spending, and that higher government spending this year should be “very good for economic growth.”

Notably, the PSEi closed at 6,450.04 points on the last trading day of 2023, which meant that the stock index had to gain at around 8.5% to reach 7,000 points.

However, the PSEi’s surge to 7,000 points was disrupted after the March inflation rate of 3.7% was announced in early April. Market sentiment also turned sour after the government announced in early May that the first-quarter gross domestic product (GDP) growth was a disappointing 5.7%, which was later revised to 5.8%. Inflation would also surge to 3.7% in June.
Those factors almost caused the PSEi to go below 6,100 points at latter part of June.

INVESTOR SENTIMENT IMPROVES

However, investor sentiment started to turn positive after the Bangko Sentral ng Pilipinas (BSP), despite the inflation rate hitting 4.4% in July, reduced key rates by 25 basis points to 6.25%. And in early August, the government reported that second-quarter GDP settled at a higher 6.3%.

Also, there were signals that inflation in the United States was slowing down, causing the US Federal Reserve to announce possible rate cuts in the coming months. The key rates in the US hovers from 5.25% to 5.5%.

ON TO 8,000 POINTS

With the PSEi back to the 7,000-point level, the next question is: Will the PSEi hit 8,000 points soon?

The answer could be a “yes.”

In fact, the PSEi going beyond 8,000 points is nothing new, as the stock index almost reached 9,000 points in early 2018. At that time, Philippine GDP was consistently growing above 6%, and the debt-to-GDP ratio was around 30%.

And for analysts like Tan, the PSEi reaching even 9,000 points can be a reality.
“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 short term, I’m still positive over the long term because my feeling is if the market sentiment improves, everything normalizes,” she said.

We can easily reach 9,400 because the market is already cheap right now. So those are positive scenarios,” Tan added.