AB Cap expresses long term confidence in local stock market despite significant drops

In a market briefing, AB Capital Securities (AB Cap) Assistant Vice President and Deputy Head of Research Lexter Azurin expressed confidence that the local market will recover as COVID-19 is contained domestically.

AB Cap downgraded its PSEi target this year to 6,850 from 7,600 at the start of the year as the previous forecast had assumed that the Philippine gross domestic product (GDP) would grow by at least 6.5% this year.

In Q1, Philippine GDP contracted by 4.2% year-on-year, sharper than the consensus decline of 3.2%.

The new PSEi outlook for this year suggests a decline of 289.71 points, or 4%, from last year’s finish of 7,139.71.

On the latest MSCI rebalancing, Azurin noted that PSEi companies Puregold, Megaworld, and Aboitiz Power would likely see some foreign outflows as these had been stricken off the closely tracked MSCI Global Standard Index.

On Wednesday, Puregold, Megaworld, and Aboitiz Power fell by 2.8%, 5.37%, and 2.74%, respectively, and the main-share Philippine Stock Exchange index (PSEi) fell by 90.43 points, or 1.43%, and closed at 6,236.40.

“We view the significant drops as a huge buying opportunity at a one to two-year time horizon,” said Azurin.

SOURCE: Inquirer