Phl stock market is one of Asia’s best performing bourses
Posted on April 28th, 2012 under Biz Progress
Philippine shares continue to trek to new heights outshining many of its regional rivals.
The main-share Philippine Stock Exchange index so far has marked 17 record closings since the start of the year. In all, the local index has gained more than 840 points.
Overall, the market has risen more than 19% year-to-date, making the country the second-best-performing equities market in Asia so far in 2012, next only to Pakistan.
“It’s a confluence of events. Our story came at a time that the U.S. and Europe are hurting. We are also a small market and a good inflow of foreign funds is enough to drive us up significantly,” said Oliver Plana, head of sales at local brokerage house Asiasec Equities.
A string of positive factors have contributed to the renewed interest in Philippine equities: last year’s one-notch ratings upgrade from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, a push from President Benigno Aquino for clean government, tight fiscal discipline, and a stable growth outlook.
Theresa Marcial-Javier, senior vice president of BPI Asset Manager, whose 130 billion pesos unit trust operations is the biggest in the Philippines, said the lower yield on fixed-income securities has also bolstered the attractiveness of equities.
She said BPI’s estimates suggest the PSEi could rise to 5500 within the year on the back of strong earnings, particularly for banks and property firms. BPI is projecting the economy to grow 4.9% for the year, up from 3.7% in 2011.
Luz Lorenzo, market strategist and head of research at Maybank ATR-Kim Eng, said stronger government spending to bolster economic growth this year and prospects of a credit upgrade are key considerations for investors. “The peso’s appreciation has been there for several years and it’s a factor but it’s not as prominent as a (potential) ratings upgrade.”
The Aquino administration also gets a tick for its fiscal discipline. Song Seng Wun, regional economist at CIMB Research in Singapore, said the government’s improving budget position has helped to draw foreign investors seeking potential growth areas in Southeast Asia other than Indonesia and Thailand.
The strong outlook for the market is also attracting more listings on the exchange.
Hans Sicat, president and chief executive of the PSE, is optimistic that more companies will turn to the stock market as a “channel for capital raising.”
Investors could be in for more good tidings. The Philippine central bank is expected to keep policy rates steady for some time after rate cuts in January and March totaling 0.50 percentage point pushed the overnight rates to levels last seen in mid-2009,
The market gains are across the board from industrial, telecommunications, mining, holding firms, infrastructure to food and beverage and property.
Stock markets in the United States and across the Asia-Pacific also received a boost when the Federal Reserve chair Ben Bernanke issued a statement, saying that the US central bank would not hesitate to launch another round of bond purchases if the economy were to weaken.
For the time being, however, Bernanke said “it appears that we are more or less in the right place.”