ONLINE brokerage firm COL Financial is keeping its year-end target of 7,500 points for the benchmark Philippine Stock Exchange index (PSEi), saying the market remains undervalued even with the uncertainties brought about by the Middle East war.
COL Financial Chief Equity Strategist April Lynn Tan said the target was based on the assumption that market trading would be at 12 times its price-to-earnings (P/E) multiple, equivalent to about one standard deviation below its historical average.
“We’re at around nine times P/E now. If we move to 12 times, which is still very cheap historically, that brings the index to around 7,500,” Tan said during the brokerage firm’s Philippine Mid-Year Market Outlook 2026 briefing on Monday.
Given the current geopolitical and economic risks, however, she conceded that the odds of the benchmark index reaching that level this year was only about 25 percent.
“We blend the fundamentals and [technicalities]. A lot of things can still happen, which is why we continue to highlight the risks,” she said.
COL Financial also said that it expected the PSEi to recover to levels seen before the outbreak of the Iran conflict, noting that the benchmark was already close to reclaiming those losses.
Chief technical analyst Juanis Barredo said the index was only about three percent below its level prior to the US-Iran war, making a return to that level achievable this year.
“The major high stands at around 6,650, which is the first resistance zone. If the market manages to break that range, it opens the possibility of moving back [up] toward the 7,400-7,500 area,” Barredo said.
But he cautioned that getting to the 7,400-7,500 area would likely take several months and depend on the market sustaining its recovery above key resistance levels.
Barredo added that the recent rebound suggested the market had found support after its correction and could continue its recovery path instead of revisiting recent lows.
Tan said the market’s direction would largely depend on oil prices, as lower crude prices could ease inflationary pressures, strengthen the peso, reduce interest rates and support corporate earnings.
She added that while investor sentiment was initially heavily impacted by the war, oil prices have since moderated, helping improve the outlook for businesses.
Citing a Bangko Sentral ng Pilipinas’ business expectations survey, Tan observed that sentiment had started to recover after weakening in March, with firms expecting stronger business activity and increased hiring over the next 12 months.
While companies remain cautious about expansion plans, they are becoming more optimistic as lower oil prices improve the economic outlook, she added.
On Monday, the benchmark PSEi rose 11.61 points or 0.18 percent to close at 6,415.72, continuing a positive finish for a fourth consecutive session.
