Time to Invest: Economic and Stock Market Recovery Predicted for 2024

Higher growth, lower borrowing costs, and a stronger peso, are just some of the things that make analysts bullish about 2024.

Sun Life Investment Management & Trust Corporation (SLIMTC), the investment arm of Sun Life Philippines said it expects a better economy, including stock market recovery, in 2024. This is as inflation, or the rate of increase in the price of goods and services, has peaked and prices start to stabilize.

Better Numbers in 2024

As of January, the inflation rate declined to 2.8%, its lowest level since October 2020.

In a briefing, SLIMTC noted that it is looking at a Gross Domestic Product (GDP) Rate of 6% this year, from 5.6% in 2023; a stronger peso at the PHP53 to PHP55 level against the US dollar; and the PSE Stock Market Index to reach the 7200 level by year-end.

“Inflows and the stable peso. We’re expecting PHP53 to PHP55 this year, and with that we’re seeing inflows from foreigners going back into the market,” explains Teo.

Supporting the positive outlook is the expectation that the U.S. Federal Reserve will cut interest rates by as much as 100 basis points. This gives the country’s own Central Bank room to likewise cut its key interest rates. This move, will make borrowing cheaper, and fuel more economic activity. Teo expects the reduction in key interest rates to start by the late second quarter of 2024.

Along with the the drop in interest rates, Sun Life expects the Philippine Stock Exchange Index to reach the 7200 level by year-end, backed by more foreign interest and improved corporate earnings.

But Teo cautions that the stock market must stay above the 6700 level to make the 7200 index level a reality. If the PSE index breaks the 7200 level, the next target would be the 8,000 level for the PSE Index.

How to Manage Risks

Teo adds, that key risks must also be managed to propel economic growth—the country must prepare and minimize the risk of the upcoming El Nino in March or April, maintain a stable political climate, and ensure that government’s infrastructure projects are on track.

Of the three, Teo sees infrastructure development as the biggest factor in restoring investor confidence in the country. “Infrastructure will be a good catalyst (for investors),” he explains.

43% of this year’s national budget is going to the construction and rehabilitation of road networks and railway systems. This includes the North-South Commuter Railway System, which will connect Clark City in Pampanga to Calamba Laguna; Phase One of the Metro Manila Subway Project which consists of 15 stations from Valenzuela to Pasay City and is currently 40% complete; The LRT Line 1 Cavite Extension Project; reconstruction of the PNR South’s main line and the MRT 3 Rehabilitation Project.

These are on top of the Build-Operate-Transfer (BOT) Projects with the private sector, which includes the rehabilitation of the Ninoy Aquino International Airport, recently won by the consortium led by San Miguel Corporation.

On the political front, apart from the country’s own political stability, foreign investors will be closely observing the results of the U.S. elections in November, where former President Donald Trump is resurfacing as a strong contender. But Teo is optimistic, this will not dampen the financial markets. “We might expect a stronger dollar,” he says. “For the U.S., the reaction will be generally positive given that Trump is pro-protectionism.”

Be Invested in the Stock Market

On the back of the generally positive outlook, Sun Life advises investors to take full advantage and be invested in the financial markets. “Hopefully you really put your cash to work and not just leave it there,” advises Teo.