Security Bank Investment Group sees equity market rebound in 2022

Security Bank’s Trust and Asset Management Group expects the economy to rebound in 2022 with the Philippine Stock Exchange index (PSEi) hitting the 8,000-mark by the end of the year.

In a webinar hosted by Security Bank’s Trust and Asset Management Group called “Finding Solid Footing”, the group shared its 2022 outlook for the Philippines equities market and how the continued recovery of the stock market can contribute to the overall improvement of the Philippine economy.

The PSEi went down close to 4700 points on March 19, 2020. But while the index slowly recovered, it remained highly volatile because of various COVID-19 restrictions on the Philippine market.

“With listed companies being able to adapt to the new normal, this has made them more resilient to lockdowns, allowing both local institutional and retail investors to be more comfortable in increasing investments in the stock market. This reflected in the continued recovery of the PSEi every time a sell-off occurs. We at TAMG are optimistic that by year-end, the index will reach the 8,000-mark,” said Basil John Go, Head of Equities at Security Bank Trust and Asset Management Group.

Despite the optimism, the group warned of possible scenarios that can affect the bullish outlook on the stock market, such as new deadly COVID-19 variants, higher than normal inflation, a more hawkish Federal Reserve that can lead to higher-than-expected interest rates, an escalation of the Russia-Ukraine conflict, and the possibility of having a challenging election season.

“We are optimistic that for 2022, the equities market will outperform the fixed income market, through cheap valuations, a strong domestic bid, and the return of foreign flows.  We are looking at a strong rebound for the equities market and the possibility of double-digit returns.” added Go.

Economic themes during the pandemic

Looking at the economy and how it was badly affected at the start of the pandemic, the investment group sees 2022 as the year where investors will gain more solid ground as more certainty is shown in tapering off COVID-19, as well as the preparedness of corporations to operate in the new normal.

“We saw 2020 as the year where we had to swim the trench because of the unprecedented negative effects of COVID-19 to the economy, both locally and abroad. In 2021, despite the continued struggle of the economy, we saw pockets of improvements as vaccines started to enter commercial production and people began to embrace the concept of the new normal to adapt.  However, we were still not out of the water, and we had to keep swimming the course.  Now as we enter 2022, we are optimistic that we are beginning to find our solid footing by the large and growing vaccination rate of people that allows for increased mobility and more economic re-opening. Finally, we are recovering from the losses and damages that COVID-19 brought to the local and global economies,” said Noel Reyes, Chief Investment Officer at Security Bank Trust and Asset Management Group.

Despite the optimism, the Trust group is still wary of risks and black swans which can disrupt the recovery of the Philippine economy, such as the rising global policy and interest rates, inflation, deadlier COVID-19 variants, the Russia-Ukraine conflict, and the coming national elections.

“As 2022 unfolds, we will continue to assess the movements of the economy and how it will affect the country’s recovery. We continue to bank on the strong response of the BSP and the likely recovery of the GDP to pre-pandemic levels, sustained by a solid stream of OFW remittances and BPO revenue growth, as well as a healthy level of GIR, to help propel the Philippine markets back to its positive trajectory,” added Reyes.