At 7,500, the Philippine Stock Exchange index (PSEi) is now up over 17% year-to-date (YTD) and is currently the top performer across ASEAN. While our 7,500 year-end index target has been achieved already, the market continues to offer decent upside to our 12-month index target of 8,500. Note that the consensus 12-month index target now stands at 8,354 based on Bloomberg\u2019s target price compilation.<\/p>\n\n\n\n
Net foreign buying streak extends to 27 straight sessions<\/strong><\/p>\n\n\n\n The current net foreign buying streak into the PSE has extended to 27 straight sessions. This matches the record we saw last March 2024 and is the longest seen since May 2014. A total of US$411 million has flowed into the market during this streak pushing the YTD balance to +US$87 million vs. -US$500 million in the 1st half (1H) of 2024.<\/p>\n\n\n\n Sensitivity to rates and favorable valuations are among the factors that triggered renewed foreign interest in the local stock market. The Philippines is one of the markets with positive rate differentials vs. the US, but remains historically low. With the Fed expected to cut more and local inflation trending lower than expected, the BSP has a clearer and longer runway to cut its rates (we now forecast a total of 75bps cut instead of 50bps this year).<\/p>\n\n\n\n Overweight (Buy) on Banks and Conglomerates<\/strong><\/p>\n\n\n\n Banks and Conglos top the list of most net foreign bought stocks during the current streak. And it\u2019s only lately that we\u2019ve started to see foreign interest into the Consumer sector. There seems to be limited interest in Property with only ALI seeing some net inflows.<\/p>\n\n\n\n We remain overweight on Banks and Conglos, and we expect the Consumer and Property sectors to play catch-up in terms of foreign flows.<\/p>\n\n\n\n Our stock pick<\/strong>s<\/p>\n\n\n\n Among our top stock picks, GTCAP, SMPH, JFC, CNVRG, SM and BDO continue to offer double-digit upside. MONDE and MBT also offer some more upside, albeit currently now more limited.<\/p>\n\n\n\n We also highlight that foreign ownership in the Philippine stock market remain relatively low at 24% vs. 27% pre-pandemic and a high of close to 30% back in 2014. <\/p>\n\n\n\n