SMC PRESIDENT and COO Ramon S. Ang (4th from left) leads the bell ringing ceremony at the Philippine Stock Exchange recently after raising P30 billion via the issuance of company shares. With him are (from left) SMC treasury head Sergio G. Edeza, deputy chief finance officer Joseph N. Pineda, treasurer and chief financial officer Ferdinand K. Constantino, PSE chair Jose T. Pardo, president and CEO Hans B. Sicat, exchange directors Vivian Yuchengco and Amor I. Iliscupidez, PSE treasurer Omelita J. Tiangco, corporate secretary Aissa V. Encarnacion and COO Roel A. Refran.
It was a roller-coaster ride for the local stock market in the first quarter, with the main stock barometer slipping into the much-dreaded “bear” territory early on but firming up before the first month was over. By March, the index has strongly rebounded, attracting a fresh new round of net foreign investor inflows, albeit at still modest levels, and reversing losses seen early in the year.
The Philippine Stock Exchange index (PSEi) slid to a low as 6,084 in January but was trading back to the 7,000 to 7,300 levels by March.
Apart from jitters on the Chinese economy and the US Federal Reserve’s prospective interest rate increases this year, concerns about the prolonged slump in oil prices have emerged. For an oil-importing country like the Philippines, the freefall in global oil prices has been like manna from heaven, making fuel prices more affordable for car users, public utilities and airline operators. But the prolonged slump started to worry economists as the oil-producing Middle East had a big concentration of overseas Filipino workers (OFWs) whose remittances were supporting many households in the country.
Locally, political uncertainties ahead of the May 9 elections have likewise escalated. Investors have been generally happy during the term of the Aquino administration, during which the government achieved investment grade rating for the first time. But while Mr. Aquino had tried to frame the presidential race as a referendum for continuity or change, his preferred successor, former Interior Secretary Mar Roxas, fares poorly in surveys. As of press time, the front-runner in the presidential poll survey was unorthodox Davao City Mayor Rodrigo “Digong” Duterte while Ferdinand “Bongbong” Marcos Jr.—namesake of the former strongman who was ousted during the 1986 Edsa Revolution—leads the vice presidential race.
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Patrick Cheng, senior vice president and group head for trust and investments at China Bank, which has about P1 billion in assets under management (AUM) via its equity-based unit investment trust fund (UITF), said local stocks have room to climb back further to 7,500 to 7,600 this year, backed by stable domestic growth prospects despite the political noise arising from the upcoming presidential elections. Separately, China Bank has a high dividend-yielding equity-based UITF with AUM of around P300 to P400 million.
When the PSEi moved out of bear territory in end-January, one favorable catalyst was the report about the country’s better-than-expected fourth-quarter domestic economic growth rate of 6.3 percent year-on-year, beating the 6-percent market consensus. For the full-year 2015, gross domestic product (GDP) grew by 5.8 percent.
