By Denise A. Valdez

THE Philippine Stock Exchange index (PSEi) is projected to end the year above the 6,000 level, down from earlier estimates of closing within the 8,600-8,900 range, as an effect of the coronavirus disease 2019 (COVID-19) pandemic.

A capital markets research for April 2020 prepared by First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said the recovery of the stock market is expected to begin by the second half of 2020.

“Equity investors may take time to get back into the market given the huge losses they have suffered and the need to prepare for a more secure future. We think, however, that the situation would start normalizing (of sorts) in H2 (second half) and we see PSEi ending the year above 6,000,” it said.

UA&P Senior Economist Victor A. Abola, who was one of the authors of the research, said in a mobile message that the second half would have to signal resumption of businesses in several sectors.

“By H2, the economy would have gone into recovery mode (although not even 90%),” he told BusinessWorld. “A lot of the uncertainty that exists today — reopening of the entire country to full economic activity, health protocols, and investor sentiment in general should improve significantly from the lows and we have seen up to this point.”

“Below 6,000 is an aberration for our stock market,” Mr. Abola added.

The PSEi has dropped to an eight-year low on March 19, falling 13.34% to 4,623.42, when the COVID-19 crisis started resulting in lockdowns both locally and abroad.

FMIC’s research noted the main index suffered the region’s biggest loss of 21.6% in March. Since then, the PSEi has been trading within the 5,342-5,946 range in April, and has sustained the 5,500-5,600 level in the first week of May.

The main index closed at 5,621.94 on Friday, down 31.22 points or 0.55% from the previous session.

However, FMIC’s previous outlook for the PSEi to end 2020 within 8,600-8,900 would have to adjust as recovery may not be as fast as desired.

“With millions of people left jobless and global supply chains in disarray, COVID-19’s dreaded economic impact can only be negative and the future uncertain,” FMIC said.

The Philippines has implemented localized quarantines since the middle of March, covering initially the island of Luzon, which accounts for about 70% of the country’s gross domestic product.

Easing of the quarantine started on May 1, but Metro Manila and its nearby cities remain under quarantine until May 15.

An announcement on the extension or lifting of the Metro Manila lockdown is expected early this week.