Foreign flows, savings to propel PHL stock market higher in 2015, 2016

The savings scenario in the Philippines and the healthy inflow of foreign funds will continue to drive the stock market through its bull run this year and the next.

 

The PSEi is seen ending 2015 at the 7,900 level and trek higher to 8,780 by end-2016, an official of the Philippine American Life and General Insurance Company (Philam Life) said Wednesday.

 

Foreign investors will continue to buy Philippine stocks as the country's growth story continues to be positive, Philam Life head of Equity Fund Management Eduardo Banaag told reporters in a briefing in Makati City.

 

"Fund managers, like us, they favor the Philippines along with Indonesia, China, New Zealand and India," he said.

 

"Economic growth is divergent, as well as monetary policy. But here, growth has been accelerating," he noted.

 

In fact, foreign funds bought $530 million worth of Philippine stocks just in January, versus $1.27 billion in 2014.

 

Last year, the Philippine GDP managed to grow 6.1 percent, after accelerated government spending helped the economy recover in the fourth quarter.

 

The widening savings-investment gap will find their way to risk assets, like stocks, this year, Banaag said. "Where the savings goes, the stock market also goes."

 

For 2015, the savings-investment gap is expected to grow by 5 percent to P2.27 trillion, he said.

 

The savings will come from the net income of companies, net income of recipients of remittances and unused government budget, Banaag noted. – VS, GMA News