Reality Bites: COL Financial Downgrades 2015 Yearend PSEi Forecast

COL Financial, the Philippines most popular stock brokerage firm, has just downgraded its 2015 yearend forecast for the Philippine Stock Exchange Index (PSEi) to 7,950 from the 8,300 it predicted in January.

COL Financial downgrades 2015 yearend forecast
Sorry! COL Financial downgrades 2015 yearend forecast. Image from COL Financial Facebook page (see here)

 

Someone very important made an even bolder PSEi prediction — will he downgrade it as well?

 

That someone is the President of the Philippines, Benigno “P-noy” Aquino III. Back in April 2015, when the PSEi breached the 8,000 mark, Pres. Aquino predicted that the PSEi will reach 9,000 or even 10,000 before his term ends (read news here). His term ends June 2016. Polticians say the most optimistic things and they never make speeches when the markets are down, so I doubt he’ll make an adjustment.

To be fair, the run to the PSEi towards April 2015 had been spectacular, reaching a record close of 8,127.48 on April 10.

PSEi from Sept 2014 to Aug 2015
What goes up, must come down? PSEi from Sept 2014 to Aug 2015. Image from Bloomberg

 

See how the PSEi trended in different time frames from Bloomberg here.

This is not the first time that COL financial adjusted their forecast. That 8,300 prediction in January? It was adjusted from an earlier prediction of 7,800 (see news here).

As recently as May 2015 in the Philippine Retail Investment Conference (see related post here), April Lee Tan, research head of COL Financial, reiterated the high forecast. I swear I heard even her say 8,500 (it’s in my notes y’all). She stuck with the high prediction because she said that COL Financial’s method of determining the forecast was based on a meticulous bottom-up approach (translation: they analyzed the fundamentals of the individual stocks that comprised the PSEi).

Will COL Financial make another PSEi forecast adjustment in a few months? Probably.

Predicting the market is never easy. After all, financial analysts are just that — analysts. They’re not psychics.

 

– Finance, M.D., thefinancemd.com

 

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Finance, M.D.

Finance, M.D. is a practicing physician who dabbles in finance and investment. He has passed all three levels of the Chartered Financial Analyst (CFA) exams, all in his first attempts. thefinancemd.com

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