While 2025 is expected to be a promising year for the country due to an anticipated consumption rebound, the Unicapital Group has lowered its year-end target for the Philippine Stock Exchange index (PSEi) to 7,800 from 8,000.

In a briefing, Unicapital Securities Inc. Head of Research Wendy Estacio-Cruz explained that while 7,800 represents a 20 percent gain from the 6,528 level at the end of 2024, the target was revised downward to reflect 2024 earnings per share (EPS).

“We assume a 10 percent year-on-year increase in the EPS index and a market price-to-earnings (P/E) ratio of 13 times. The baseline target P/E remains 1.0 standard deviation below the past five-year average of 15 times,” she said.

Unicapital’s EPS growth forecast is based on its earnings estimates for the index companies.

“We expect further policy rate easing to boost corporate earnings through a lower cost of capital and increased consumer spending. Our view is supported by the anticipated further reduction in policy rates by the Bangko Sentral ng Pilipinas (BSP) in 2025,” Estacio-Cruz added.

She also noted that downside risks include prolonged elevated interest rates and an escalation of geopolitical tensions disrupting trade supply.

Unicapital emphasized that the Philippines is expected to remain one of the fastest-growing economies in Southeast Asia despite economic challenges and pressures from the new US administration.

The firm also anticipates gains from election spending this year, noting the increased visibility of campaign materials.

The PSEi often experiences a short-term rally during election season, driven by optimism and increased liquidity.

Unicapital believes that key sectors poised to benefit include consumer goods, construction and infrastructure, and media and telecommunications. Consumer companies, in particular, often report a five percent to 10 percent revenue increase due to heightened spending.

“We see an all-out election spending both on a local and national scale as we move closer to the May midterm elections. This, coupled with easing inflation, will boost household spending and ultimately favor the economy’s growth this year,” said Estacio-Cruz.

Also present at the event, Bank of the Philippine Islands (BPI) Lead Economist Emilio “Jun” Neri Jr. discussed the potential global economic impact of policies from a new US administration, as well as the Philippine mid-term elections.

He cautioned that external supply shocks for food and oil could still affect growth.

Unicapital projects 6.3 percent economic growth, citing the expected continuation of policy rate cuts and highlighting the country's strong growth potential and promising opportunities.

The firm anticipates that the BSP will maintain a measured easing stance, depending on developments from the US Federal Reserve and global trade policies.

Unicapital acknowledged risks from geopolitical tensions and uncertainties, including unforeseen external threats, potential trade wars, and global supply chain disruptions. However, they believe that domestic opportunities and policy shifts will balance these risks, presenting a promising outlook for investors.

The recently signed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Law is expected to further improve the Philippine equity market and attract domestic and foreign capital inflows.