BPI Securities Corp. is downgrading its 2020 projection for the Philippine Stock Exchange index (PSEi) to 6,600 from its initial estimate of 9,000 due to the coronavirus disease 2019 (COVID-19) pandemic.

In a statement on Thursday, the brokerage arm of Ayala-led Bank of the Philippine Islands (BPI) said the PSEi may land within the 6,200 to 6,600 range by year’s end because of all economic effects brought by measures to contain the virus.

The PSEi closed at 5,700.71 yesterday and has stayed within the 5,300 to 5,900 range for the past month.

BPI Securities President and Chief Executive Officer Hermenegildo Z. Narvaez said breaking into the 6,600 level is still possible by end-2020 with the anticipated U-shaped recovery of the economy in 2021.

He noted as a base case scenario, BPI Securities expects the global economy to recover to its 2019 level next year.

“Some sectors are probably doing better than others. Consumer manufacturing generally has been good… As for retail, I think a lot of retail companies derive their revenues from the supermarket-side of the business. So the near-term outlook has been positive,” he was quoted as saying.

He also identified telco as one of the compelling industries in the near term because of the surge in internet demand given the work-from-home scheme across sectors.

But looking beyond the near term, Mr. Narvaez warned investors of sustained volatility in the market due to uncertainties on the lockdowns and a possible correction in the US market.

“If you’re taking a six to 18 months’ view, I still think that these levels are going to be good. That said, you have to be prepared for volatility, because the economic numbers are going to be quite grim,” he said.

“Obviously, it will take a while, in our view, before we find a vaccine. And only until we actually find a vaccine will people become more comfortable about traveling and resuming normal operations… These are some of the things we have to be wary of,” he added. — Denise A. Valdez

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