BDO Nomura Securities is bullish on the Philippine stock market, saying the bellwether Philippine Stock Exchange Index will hit 9,100 points in 2018 from 8,300 this year on the back of strong economic growth
BDO Normura senior vice president and research head Dante Tinga Jr. said he was upbeat despite the risk of increasing interest rates next year and a further slowdown in the business process outsourcing industry.
BDO Nomura sees the property, banks and industrial sectors outperforming next year. The sectors are expected to benefit from the domestic growth as well as increased government spending on infrastructure.
BDO Nomura, however, has a bearish outlook on consumer issues because of intensifying competition and rising input costs, as well as telecom stocks amid margin pressures and increased capital expenditures as telco companies continue to improve their data service.
BDO-Nomura’s top stock picks for 2018 are Ayala Land Inc., Bank of the Philippine Islands, International Container Terminal Services Inc., Jollibee Foods Corp., Metropolitan Bank & Trust Co., Petron Corp., Semirara Mining and Power Corp., Shakey’s Pizza Asia Ventures, SM Prime Holdings Inc. and Wilcon Depot Inc.
On the pending tax reform bill, BDO Nomura senior economist Euben Paracuelles said package 1, without the proposed increase in coal taxes, would increase the 2018 inflation rate by 0.8 to 0.9 percentage point. Jenniffer B. Austria
But if the proposed tax on coal is implemented, Paracuelles expects additional inflationary pressures with the fuel as a primary source of energy in the country.
The tax on coal could also hurt the competitiveness of the Philippines as the nation already has one of the highest energy costs in the region.
BDO Nomura expects the Philippine inflation rate to hit 4.3 percent in 2018, higher than the government estimate of around 4 percent.
It sees the gross domestic product expanding 6.9 percent in 2018 from the 6.7-percent forecast this year.