Stock Market PILIPINAS: Empowering the Filipino Investors

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Massive infrastructure push seen boosting investment pledges by 10% in 2018

The rollout of big-ticket infrastructure projects would make the Philippines more attractive to investors and increase investment pledges approved by the Board of Investments (BOI) by at least 10 percent next year, according to Trade Secretary Ramon M. Lopez.

On the sidelines of the MVP Group’s Voyager Innovation’s launch of Digihub, Lopez said investment pledges could grow by a “reasonable” 10 percent in 2018. “At least a 10-percent growth is reasonable for next year.”

Aside from the implementation of infrastructure projects, he said the easing of restrictions in economic activities would hike the number of fresh projects approved by the investment-
promotion agency.

“We are undertaking a lot of reforms, starting with the Foreign Investment Negative List and the liberalization of retail and the amendment of the definition of public utilities. The infrastructure buildup will generate a lot of interest in areas outside of Metro Manila,” Lopez said.

On Monday the government announced that investment pledges approved by the BOI this year reached a record P616.7 billion, surpassing the previous all-time high of P570.1 billion posted in 1997. The figure is also 39.5 percent higher than last year’s haul of P442 billion.

Of the P616.7 billion, P268.18 billion will be channeled to energy/power projects.  Infrastructure and public-private partnership projects cornered the second-biggest amount at P127.658 billion.

Lopez sees the share of infrastructure to take up half of the forthcoming investments
next year.

As restrictions on foreign participation will be lifted in key sectors, such as retail trade, Lopez sees the share of investments from foreign sources to expand.

“This year the interest from foreign investors was there but because of the Marawi conflict, they held off for a bit. Some pursued their investments, of course, but we felt the interest could be stronger. Now that the conflict is over, those that had plans before will come in,” he said. “There’ll be a bigger foreign equity inflow next year.”

PHP Stocks Investment Portfolio [2017 Wrap-up]

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Hong Kong investors bullish on Philippines

Investors from Hong Kong are upbeat on the Philippines’ investment prospects, training their sights on the country’s agriculture, tourism, infrastructure and manufacturing sectors.

The Board of Investments (BOI) said an 11-man delegation composed of representatives from business chambers, banking community and infrastructure and manufacturing companies from Hong Kong recently visited the country to explore investment opportunities.

The BOI said the Hong Kong delegates conducted due diligence and expressed particular interest in agriculture, tourism, infrastructure and manufacturing industries.

“We are delighted to know there is a very clear signal that the Philippines looks forward to further collaboration with Hong Kong not just in trade, but also in the investment area. We are excited to take a look at a variety of opportunities specially in the agriculture, tourism, infrastructure and manufacturing sectors and shall come back to further discuss it in detail,” Hong Kong Trade Development Council executive director and Hong Kong delegation head Margaret Fong said.

With the recent signing of the ASEAN-Hong Kong Free Trade Agreement, Trade and Industry-Foreign Trade Service Corps coordinating officer Alma Argayoso said the government continues to  work on building a closer relationship between the Philippines and Hong Kong.

Argayoso said the country is ready to deepen its economic partnership with Hong Kong and is willing to share success in fostering an enabling the business environment.

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“As we move forward to further strengthen foreign business partnership, the Department of Trade and Industry and the BOI will continue to uphold the Philippine investment priorities by providing sufficient information and assisting investors on how to invest and do business in the Philippines,” Argayoso said.

According to the BOI, Hong Kong remains a strong partner of the Philippines in terms of trade and investments, ranking as the 11th source of inward foreign investments for the three quarters of 2017.

The volume of investments from Hong Kong soared 107.1 percent to P1.52 billion in the first nine months from P732.2 million a year go.

...umakyat na nga ulit ngayon eh, laki pa

Index ends 2017 at record high

Philippine stocks ended the year on a high note, with the main composite index posting a record finish on the final trading session as investors expect  2018 to be another bullish year.

The Philippine Stock Exchange index gained another 23.33 points, or 0.27 percent, to close at a record high of  8,558.42.

For the full year, the PSEi  climbed 25 percent  or  1,717.78 points from the end-2016 level of 6,840.64.

The yearend performance reversed the slump seen in the last two years. The PSEi  gave up  1.6 percent in 2016 and lost 3.85 percent in 2015.

Traders said the overall upbeat sentiment in regional markets and the passage of the tax reform package provided the much needed boost, making 2017 a good year for the local equities market.

Most sectoral indexes closed in positive territory except for the industrial and mining and oil gauges. The financial index led the gains, rising 1.24 percent to finish at 2,230.17.

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Total value turnover was significant and better than Thursday’s close at P7.26 billion. As expected, market breadth was positive, 115 to 94 while 45 issues were left unchanged.

DA Market Securities said it was a positive day for Southeast Asian markets with Indonesia and the Philippines hitting an all time high.

source: build build momentum

Construction investments up 6.8% in 2017

 The Philippine construction industry is back in the limelight following the government’s commitment to approve and implement more big-ticket infrastructure projects, the Department of Trade and Industry (DTI) said.

Trade Secretary Ramon Lopez said the government’s Build Build Build program was a big boost to the Philippine construction industry in 2017, attracting P627.4 billion in investments, or 6.8 percent higher than the 2016 level.

Of the amount, P162.7 billion came from government infrastructure spending and P464.7 billion was from private construction activities.

Trade Undersecretary Ruth Castelo attributed the increase in construction investments to higher consumer confidence and improved labor market conditions.

Castelo also pointed out the efforts made by DTI’s Construction Industry Authority of the Philippines, which has been actively gathering local industry participants in the form of dialogues and symposia with the government infrastructure sector.

“With massive support from the government, we know that contractors are willing, ready and able to group together for increased efficiency and capability to implement big-ticket infrastructure projects,” Castelo said.

The construction industry employed 3.86 million workers in 2017, up 10.3 percent from 2016.

“With the ramped-up infrastructure spending and anticipated rollout of massive infrastructure projects, the industry would need an addition of at least two million workers across the country for the next five years. This means two million more jobs for our countrymen,” Castelo said.

The DTI said agencies like the Construction Manpower Development Foundation has accredited a total of 322 construction project managers and superintendents capable of handling big ticket infrastructure projects, the Philippine Overseas Construction Board has accredited 1,557 construction performance evaluators, and Construction Industry Arbitration Commission has accredited 89 arbitrators and 28 mediators that settle construction disputes in 2017.

As of November, meanwhile, the Philippine Contractors Accreditation Board has given license to 9,408 domestic firms and accredited at least five foreign firms, while 35 special licenses have been issued to Chinese, Japanese, Korean Italian, Singaporean and Australian contractors in partnership with Filipino construction companies.

...nice Index close to start 2018 Big Grin

PSEi greets 2018 with new record high

LOCAL STOCKS charged deeper into record territory to kick off the year, riding a raging global bull market fueled by improving outlook for global growth.

The bellwether Philippine Stock Exchange index (PSEi) picked up where it left off in 2017, chalking up a gain of 1.93% to close at a new all-time high of 8,724.13 on Wednesday.

The PSEi is coming off its first annual gain in three years, rising 25.11% last year on the back of stronger foreign fund flows amounting to P56.21 billion compared to P2.80 billion in 2016.

“The back-to-back closing at new record highs on the first trading day of 2018 and last trading day of 2017 is an auspicious sign for our stock market,” PSE President and Chief Executive Officer Ramon S. Monzon said in a statement.

“Investor confidence and optimism were very apparent in today’s trading and we hope our market will remain robust for most of the year.”

Foreign funds continued to scoop up local stocks, staying in net buying territory for the sixth straight session to the tune of P347.99 million on Wednesday, smaller than the P1.79 billion in the prior session.

“We ended 2017 strong. We started the year with a bang,” Miguel A. Agarao, analyst at Wealth Securities, Inc., said in a phone interview.

“You have a global bull market. There was pent-up buying and we saw two days worth of whatever the foreign wanted to buy today.”

The PSEi drew strength from gains elsewhere in Asia, with markets in Thailand and Hong Kong delivering multi-year highs.

Major indexes in Wall Street also notched fresh peaks on the back of a tax reform overhaul seen boosting corporate profits and the US economy.

On the local front, the key driver for optimism is the government’s tax reform program that will fund much-needed infrastructure projects, with more measures likely to be enacted this year after President Rodrigo R. Duterte signed into law last month the first of up to five planned packages.

“It’s not just a one-shot, short-term thing. It’s a long series of reforms,” Wealth Securities’ Mr. Agarao said, noting that enactment of Republic Act No. 10963, or Tax Reform for Acceleration and Inclusion Act, initially failed to electrify the market but the line-item veto of President Rodrigo R. Duterte sent the right signals to investors.

“We are bullish on the stock market (this) year,” Michael Gerard D. Enriquez, chief investment officer at Sun Life of Canada Philippines, Inc., said in a mobile phone message.

“We expect company earnings to be stronger especially the property and banking sectors. However, we expect the consumer sector to continue to be challenged due to higher input costs and intensifying competition.”

[18W1] PHP Stocks Investment Portfolio

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Record capital raising at PSE expected this year

ENCOURAGED by the positive economic outlook, corporates are expected to raise a record amount of capital from the stock market this year, even with a slowdown in initial public offerings (IPO), First Metro Investment Corp. (FMIC) said in a briefing on Thursday.

Capital raising will accelerate by a third to P934 billion this year from P724 billion in 2016 on the back of higher equity and fixed-income issuances, FMIC Head of Investment Banking Group Jose Pacifico E. Marcelo said.

Equity issues will advance 79% to an all-time high of almost P247 billion, with issuances from listed companies driving the increase.

The flurry of fund-raising activity at the stock market comes at a time when the bellwether Philippine Stock Exchange index (PSEi) is seen peaking at 9,400 this year, translating to a price earnings (PE) ratio of 21x and supported by a growth of 10% in earnings per share, First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said. PE ratio is a measure of how expensive a market is.

After rallying to uncharted territory at the start of the year, the PSEi’s level is still “well-justified” because income growth remains robust, but investors have to be more “picky” in selecting stocks, Ms. Ulang said, noting property, banks, consumer, infrastructure, conglomerates, manufacturing and utilities are its preferred sectors.

The planned $3-billion follow-on offering of an enlarged San Miguel Pure Foods, Inc. will quadruple the total value of follow-on offerings and private placements to P162 billion from P41 billion in 2016.

Stock rights offerings, on the other hand, will slightly go down to P73 billion from P75 billion.

Likewise, the value of maiden share sales will fall by nearly half to P12 billion from P23 billion, Mr. Marcelo said, noting IPOs take a long time to prepare and banks are still the primary source of corporate debt financing.

“We’re not too optimistic that there will be many IPOs, which is sad because IPOs add depth to the market,” Mr. Marcelo said.

One possible new entrant in the stock market is The Lush Company, the firm behind the Fruitas brand. FMIC was tapped to handle the deal, which may take place in the first half, depending on market conditions, Mr. Marcelo said.

For the fixed-income market, corporates will drive the expected 17% uptick in total volume of P687 billion from P586 billion, with retail treasury bonds steady at P437 billion, as the government taps new foreign markets for financing.

Corporate bond floats will climb 68% to P212 billion from P126 billion, and preferred share issuance will increase 65% to P38 billion from P23 billion.

Merger and acquisition activity will remain strong because of the favorable economic growth prospects, with the food and beverage, infrastructure and construction sectors on top of investors’ radar, Mr. Marcelo said.

...shariah stocks

PSE finds 60 securities compliant with Shariah

THE Philippine Stock Exchange (PSE) found 60 securities to be compliant with the principles of Islamic finance as of the end December 2017, it said in a quarterly review posted on Tuesday.

The review period ending December saw three firms enter the list against the quarter prior, where the PSE tallied a total of 61 Shariah-compliant firms. This includes Ionics, Inc., Keppel Philippines Properties, Inc., and Philab Holdings Corp.

Four firms, meanwhile, were dropped from the list, namely Apex Mining Company, Inc., Asian Terminals, Inc., Philippine Estates Corp., and Philippine Realty and Holdings Corp.

The PSE tapped IdealRatings, Inc. to conduct the screening of the listed firms, as per the Accounting and Auditing Organization for Islamic Finance Institutions standards for Shariah compliance.

Under Islamic finance principles, firms must not enter into businesses engaged in conventional interest-based lending, financial institutions, insurance, mortgage and lease, derivatives, pork, alcohol, tobacco, arms and weapons, embryonic stem-cell research, hotels, gambling, casinos, music, cinema, and adult entertainment, among others. A 5% cap in investments is set should firms engage in such businesses.

PSEi seen to hit 9,300 but market correction looms

INVESTORS should wait for a market correction in the coming months if they are to buy more aggressively, as looming interest rate may weigh on the Philippine Stock Exchange index (PSEi).

This is according to stock brokerage COL Financial Group, Inc., noting risks such as higher-than-expected inflation due to the tax reform program, impending rate hikes by both the United State Federal Open Market Committee (FOMC) and the Bangko Sentral ng Pilipinas, and a rise in 10-year bond rates, may prompt the market to take a pause after reaching another record high last week. 

“There’s room for rates to correct… The market is anticipating inflation of 3.6%, 10-year bond rates of 5.3%, two to three rate hikes from the Fed (FOMC), and two rate hikes from our own BSP. But what if inflation goes above 3.6, and the 10-year bond rate goes above 5.3%,” COL Financial Research Head April Lynn C. Lee-Tan said in a press briefing on Friday. 

“I think there will be some level of confusion, and negative reaction if those risks actually materialize… Yes, we are positive, but now is not the time to be overweighing the market. Wait for the market to correct to buy more aggressively,” Ms. Tan added.

With corrections expected over the next 12 months, COL Financial predicted the market to reach the 9,300 level by yearend, around 400 points away from it recent close above the 8,900 mark. Factors boosting this performance would be the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, as well as the growth of the global economy. 

The brokerage noted this is not a conservative projection, as investors’ positive sentiment has been priced in at its current level. It noted the market has already climbed 12.5% since TRAIN was approved by House of Representatives in May 2017. 

Another engine for growth would be the rise in government spending, as the country targets a gross domestic product (GDP) growth of 7-9%. COL Financial said government spending has lagged behind in the past, accounting for only 13% of the country’s GDP in 1998, and dropping to 10% in 2016.

“With them actually increasing their spending, we can finally see that 7-9%. This is why we’re very confident that maybe this time it’s really different. It’s not just consumer spending, but government spending as well,” Ms. Tan said.

A survey of the brokerage’s active investors showed 40% of respondents expected earnings growth of listed companies to be the market’s top driver in 2018, followed by foreign fund flows (33%), and performance of global markets (17%).

COL Financial has a positive outlook on the property, gaming, retail and restaurant sectors, while it remains negative for the telecommunications, food manufacturing, and cement industries.

“Concerns of a third player still hurting sentiment for (telco) stocks,” the firm said.

Among the stocks the brokerage recommends are Ayala Land, Inc. and Megaworld Corp. for property, Bloomberry Resorts Corp. for gaming, Metropolitan Bank and Trust Co. for financials, D&L Industries, Inc. and Shakey’s Pizza Asia Ventures, Inc. for consumer, Semirara Mining and Power Corp. and Aboitiz Power Corp. for power, and Ayala Corp. for conglomerates.