BPI Securities Corp., the stock brokerage arm of Bank of the Philippine Islands (BPI), has revised its year-end projection for the Philippine Stock Exchange index (PSEi) to 7,300 by the end of 2025.
This is lower than an earlier forecast of 7,600.
As of the end of May, the PSEi stood at 6,341, up 9 percent from its April low. However, the index is still down 3 percent year-to-date.
The brokerage firm stated that global uncertainties, such as U.S. tariff measures, and local challenges, including weak first-quarter GDP and poor corporate earnings, continue to weigh on investor sentiment.
However, lower inflation expectations and easing global prices for rice and oil are boosting investor optimism, as these factors will benefit consumers.
These positive indicators and a weakening U.S. dollar are raising hopes that the Bangko Sentral ng Pilipinas (BSP) will implement two more rate cuts this year.
“The accommodative monetary setup is good news for the market as lower borrowing costs prompt higher consumer and business spending, and is also a major tailwind to corporate valuations,” BPI Securities said.
Despite a modest 6.5 percent year-on-year core earnings growth for the PSEi in the first quarter, BPI Securities expects full-year core earnings growth to hit 7.9 percent.
Looking ahead to 2026, BPI is more positive, especially for cyclical sectors such as consumer, property and conglomerates.
“We are more upbeat towards 2026, especially for cyclical sectors (i.e., consumer, property, and conglomerates), amid a benign inflation outlook and looser monetary policy environment,” BPI Securities said.
For its stock picks, BPI Securities favors companies that would benefit from a rebound in consumption spending, such as Ayala Corp. and SM Investments Corp.
It also expects companies with dynamic growth strategies and significant market shares in expanding markets, like Century Pacific Food Inc. and Converge ICT, to perform well.
Additionally, companies with stable cash flows and dividend yields, such as Manila Water Co. Inc., Puregold Price Club Inc. and RL Commercial REIT Inc., are expected to do well.
However, factors that could affect the market’s upward momentum include the impact of trade wars, fewer-than-expected U.S. Federal Reserve rate cuts, and stricter U.S. immigration and job policies that could affect OFW remittances and BPO revenues.
