Online broker sees PSEi hitting 4,200 in June 2008

The local stock market's main index is expected to hit 4,200 in June next year due to a number of favorable factors such as low interest rates in the country and lesser dependence on the United States economy, a report by online stock brokerage firm CitisecOnline said. “Low dependence on the US economy, ample global liquidity and the rerating of the Philippines together with Asia will fuel the continuous appreciation of the local market, prompting us to increase our end June 2008 PSEi (Philippine Stock Exchange index) target to 4,200," CitisecOnline said. On Oct. 8, the PSEi hit a new record high of 3,873.50 buoyed by Bangko Sentral ng Pilipinas rate cut. Trading has since moderated, with the index closing at 3,767.78 on Thursday. Earlier this month, the BSP cut interest rates by 25 basis points following the US Federal Reserve’s move to also lower interest rates as a way to address fears on credit tightness in the world’s largest economy. Even with the slowdown of the US economy, CitisecOnline said the Philippines is now less dependent on the US to drive its own growth. CitisecOnline said Philippine exports to the US now only account for 17 percent, from a high of 40 percent in 1992 while the net exports of the Philippines account only for 3.6 percent of the country’s gross national product as of the year’s first semester. The brokerage firm said that although remittances from the US make up half of the country’s total remittances, the overall impact on consumer spending is expected to be minimal given that remittances from the US only account for 7.9 percent of the total consumer spending. - Cheryl Arcibal, GMANews.TV