2010 Economic Outlook : Is it Good or Bad? – After 63% Surge in 2009, what now?
5 January, 2010, 1:53 pm
This 2010 Economic Outlook was taken from Metrobank’s Fund Manager Report. We just tried the UITF of Metrobank – its like mutual funds but with the bank. Instead of net asset value per share (navps), it’s net asset value per unit (navpu) since you’re simply buying unit.
We do not see a repeat of the spectacular 63% rise in the index in 2010. But we do see a modest rally in 2010 which may bring the index to 3500 buoyed by recovery in the global and domestic economies, impetus of election-related activities, and improvement in corporate earnings. Valuations remain fairly attractive compared to our neighbors, leaving some more room for upside. Corporate earnings will continue to improve, driven by higher spending related to the elections, robust OFW remittance, and last-minute dash to beat the deadline for construction and other infra projects due to the elections in May 2010.
More than 17,000 posts are up for grabs in May 2010, and the campaign spending could boost GDP by 0.35% to 0.45% as seen from previous elections. Historically, elections have been a boon to the market especially if untainted by allegations or evidence of irregularities. We believe the energy/power sector (EDC, AP, FGEN) will be the most exciting storyline this year even as the property counters (SMPH, RLC, ALI, MEG) remain a favorite on the impact of the REIT law. Consumer stocks could see a revival (URC, JFC) while appetite for telcos is likely to be subdued. Juicy takeover plays (such as MER and PX) are likely to be absent this year but should not derail the index from taking a firmer hold on the recovery path.
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