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Wednesday, April 17, 2024

Improved economic outlook to lift stock trading this week

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Philippine stocks are expected move sideways with an upward trend in this shortened trading week on improving economic outlook.

Financial markets were closed Monday, which was declared a holiday in honor of Andres Bonifacio.

Online brokerage firm said the recent positive macro-economic headlines, slowing inflation and pause in interest rates boosted market sentiments in the past trading days.

“All eyes are now on drivers for 2024, and when not broader market forces will follow the beat of the same drum as in the late 2022 up to 2023,” said.

It said if the upcoming data releases in December would track market expectations, the benchmark Philippine Stock Exchange index may retest the 6,500 level by year-end.

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“Volume remains less than ideal, however, which warrants some caution in the near-term, as the strength of technical signals are skewed by this anemic participation,” it said.

Meanwhile, PSE president Ramon Monzon said the low trading volume in the market was happening not only in the Philippines but also in other Asian countries.

“We are third in Asia in terms of trading volume drop. Unbelievably, Thailand dropped by 29 percent to 30 percent, while Philippines dropped by 16 percent to 17 percent. But having said that, it is not a justification. So we are coming out with several programs,” Monzon said.

The PSEi added 53 points, or 0.93 percent, last week to close at 6,269.50 on Friday, while the broader all-shares index climbed 0.71 percent to 3,348.22.

Foreign investors were net buyers by nearly P1 billion last week. Average daily turnover reached P3.3 billion, down from the previous week’s average of P3.5 billion.

Meanwhile, the PSE expects fund-raising activities in the stock market to reach less than P200 billion next year as market conditions remain volatile.

Monzon said in a recent interview the local bourse may hit the P200-billion capital raising mark, if big ticket initial public offerings (IPOs) such as SM Prime Holdings’ planned real estate investment trust offering (REIT) would push through.

Monzon said that in 2023, capital raising activities could reach P105 to P110 billion.

“We cannot hit P200 billion [next year]. But it depends on whether the SM Prime’s REIT will push through or not because that is big. We are expecting at least $1 billion,” Monzon said.

SM Prime earlier planned to conduct a $1-billion REIT offering in the third quarter of 2023 subject to market conditions. Given the current high inflation and high interest rate environment, the property firm pushed back its planned maiden REIT offering to 2024.

Other big-ticket IPOs that were deferred due to market conditions include Razon-led Prime Infrastructure Capital Inc., property firm Ovialand Inc. and Citicore Renewable Energy,

Monzon said several firms earlier expressed interest in listing in the stock market including the REIT company of businessman Lucio Co. and a mining firm.

Aside from the deferred IPOs and other capital raising activities, the current market conditions also affected trading activity of local and foreign investors in the equities market. Average daily trading value in the past trading weeks reached less than P4 billion.

“We will continue to work on products and services that will enhance the investing experience at the PSE. We are also hoping that the bill seeking to reduce the stock transaction tax will soon be passed into law to help attract more investors,” Monzon said.

Three IPO listings were recorded in the local bourse this year, including Alternergy Holdings Corp., Upson International Corp. and Repower Energy Development Corp.

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