Analysts: PSEi's next target is to breach 4,000

After the Philippine Stock Exchange index surged to an all time high on Thursday, analysts and traders are saying that the benchmark's immediate target is now 4,000 this year. Thursday’s close could “imply [that] the market has still some gas to try the 4,000 levels in the weeks to come," said Jonathan Ravelas, chief market strategist of Banco de Oro Unibank Inc. The market floor was closed Friday for a holiday. The PSEi rose by 4.49 percent week-on-week to 3902.56 as foreign funds “continued to flow" to the local market boosting investor confidence, said Ravelas in a report. It soared to an all time high Thursday, gaining 97.98 points or 2.56 percent to close at 3,902.56, driven by foreign funds in search of better returns outside Wall Street and other traditional markets still reeling from the global financial crisis. AB Capital Securities Inc. analyst Maria Arlysa Narciso said that if the rally persists strongly, “we can see the index reaching 4,000 points within the year or sooner." Should investors realize that there is no major fundamental news to prop up the market rally, the index will pull back, according to Narciso. “As of now, we see no significant data or factor which can convincingly lead the market higher. Most gains achieved in the past days were solely due to aggressive interest in certain stocks," she pointed out in a weekly report. Portfolio manager Michael Garcia, who manages P22 billion at Union Bank of the Philippines, maintained that there is a strong belief that Philippine stocks are entering a “significant bull market backed by fundamentals." Macquarie Group Ltd. strategist Alex Pomento also said earlier the Philippine stocks are now entering into a massive bull market. The benchmark index, he pointed out, will extend gains to 4,500 in 2011. “Breaking the record barrier sets the stage for a new run," Garcia said told GMANews.TV. Gobal investors still see the Philippines as relatively “cheap" compared to the rest of the region, according to Ravelas. There is a bullish run for Asian assets on the view that Asia will be performing better than Europe and America in the aftermath of the global recession, said an analyst of First Metro Securities Brokerage Corp. “Funds are flowing into the region," he added. JPMorgan analysts led by Gilbert Lopez said in a report that they have set their end-2011 index target at 4,550 points. The consensus is that the Philippine economy will continue to grow and corporate earnings will continue to surprise on the upside, said 2TradeAsia.com investment analyst Richmond Bata. —Jesse Edep/VS, GMANews.TV