Market Event

ADB slashed its growth forecast for the Philippines to 4.5% (from 6.5%) in 2021. The latest forecast was a “floor” which meant growth rate could be above 4.5%. The estimate took into consideration reimposition of tighter quarantine restrictions in NCR Plus which accounted for half of PH GDP.

Opinion

ADB’s forecast is the lowest among recent economic forecasts (ranging 5.5 – 6.5%). Along with the maintained MECQ measure until May 14, economic and EPS downgrades down the road will continue to put downward pressure on the PSEi. At yesterday’s close, the PSEI is still trading at 18x full-year 2021 estimate (FY21E) P/E, in line with 10-year mean.

With the absence of re-rating catalysts, the index remains vulnerable to further corrections. Retest of support levels at 6200 (17.5x P/E) / 6000 (17x P/E) is still possible if vaccine roll-out projected for the second quarter (7.7 Million doses) will not arrive on time.

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