By Denise A. Valdez, Reporter

THE PHILIPPINE Stock Exchange index (PSEi) is projected to be taken to 6,600 by bulls outside the Philippines as foreign investors are back trading locally in the past days.

In a report Tuesday, Philippine National Bank (PNB) Head of Research Alvin Joseph A. Arogo said bargain hunting from overseas investors might be what propels the market outside the slump it had been in the past months.

“Although the fundamental risk-reward is no longer attractive, the potential resurgence of foreign buying can be a catalyst that carries the index near or even past our bull case,” Mr. Arogo said, referring to PNB’s bull target of 6,672.

He said PNB was expecting the index to close at 6,672 as bull case (+10.7% from last close), 5,572 as base case (-7.5%) and 4,194 as bear case (-30.3%).

The market has been trading between 5,400 and 5,900 in the past two months before the PSEi closed at 6,025.17 Tuesday.

Given current scenarios that led the market to record three straight days of net foreign buying as of Tuesday, Mr. Arogo said the local bourse might be an attractive place for foreign investors.

He noted of three “bright spots” where the Philippines beats US markets: cheaper valuations, room for interest rates, and the absence of social unrest, referring to anti-racist protests in America.

“Unlike in April during which the upbeat sentiment was mainly supported by domestic investors, foreign flow was more influential recently. Gross purchases from overseas investors rose to 63% of total during the past three days and 53% in May from only 41% in April,” Mr. Arogo said.

“As lockdowns ease and ‘doomsday fatigue’ spreads, risk-on sentiment is gaining more momentum even though uncertainties remain,” he added.

PNB summarized into four points the things the local market would have to deal with: the possibility of a second coronavirus disease 2019 (COVID-19) wave, the non-existence of a COVID-19 vaccine, slower than expected economic recovery, and weaker than expected earnings growth.

If investors get to hurdle these things, the market may sustain its momentum and the index may hit 6,672 or higher.

PNB noted, however, that equity markets across the world are extremely volatile due to the ongoing pandemic. “[T]here is a higher likelihood that our target price may be revised significantly over the next six to 12 months,” it said.