Philippine Stock Exchange Analysis and Forecast

By Priam F. Nepomuceno

2010 Forecast – The Philippine Stock Exchange (PSE) enjoyed another banner year in 2009 after the market grew by 63 percent last 2009 as tracked by the PSE index (PSEi).

This is the highest annual index growth since 1994 when the PSE first operated as a merged entity following the unification of the Manila Stock Exchange (MSE) and Makati Stock Exchange (MKSE) and when the stock market was subsequently tracked by only one main index.

“We began 2009 with a cloud of uncertainty following a global financial crisis that unfolded in late 2007 to 2008. As the year ends, we see a strong recovery in the market which we are hopeful will spill over in 2010 and beyond,” PSE president and chief executive officer Francis Lim said.

Lim also said that the PSEi advanced in 2009 by 1,179.83 points to end at 3,052.68 as of December 29, 2009.

“2010 will be the year where we will start reaping the fruits of our efforts under the LEVEL UP strategic agenda like the full implementation of the Personal Equity and Retirement Account (PERA) law, the Real Estate Investment Trust (REIT) Act, the new trading system and the securities borrowing and lending program that will enable short selling in the stock market,” Lim added.

The LEVEL UP strategic agenda, which was launched in 2008, stood for the following: list more companies and securities; expand and educate the investor base; value and enforce corporate governance standards; enhance shareholder value; launch new products and services; upgrade market infrastructure and human resources; and partner with government and other stakeholders.

“The market’s resilience was a reflection of the collective resiliency of our listed companies, the economy and the humble efforts of the exchange to rise amidst one of the biggest financial storms in history,” Lim said.

The PSE president also said that value turnover for 2009 almost broke the one trillion peso level, a feat only achieved once before in the history of the stock market.

As of the end of trading in 2009, total value turnover amounted to P994.16 billion, 30.1 percent higher than the P763.90 billion registered in 2008. Daily value turnover averaged P4.11 billion or 32.3 percent higher than P3.11 billion average in 2008.

The combined market capitalization of listed domestic issues in the PSE at yearend appreciated by 48.2 percent to P6.03 trillion compared with P4.07 trillion in 2008.

Preliminary figures also show that foreign investors went into net buying territory again in 2009 in the amount of P14.88 billion, a reversal from the net foreign selling figure of P22.16 billion in 2008.

In terms of sectoral indices, the mining and oil index emerged as the best performer in 2009 as it climbed by 234 percent in 2009. This was followed by the industrial sector index which jumped by 116 percent.

Not to be outdone were companies in the holding firms, property, financials and services sectors as their indices posted impressive growth rates of 80 percent, 73 percent, 47 percent and 32 percent, respectively.

“Right now, the PSE is not just riding a wave of recovery, but also steering a speeding train of promising growth, hinged on the tracks of a sound LEVEL UP strategic agenda,” Lim stressed.

In terms of capital raised, the PSE saw one initial public offering (IPO) by Ripple E-Business International Inc. and two listings by way of introduction by Century Peak Metals Holdings Corp. and Agrinurture Inc. For the entire year, companies raised a total P38.77 billion in the stock market, a 23 percent improvement from 2008.

“We are enormously optimistic that we will see an improvement in listings and IPOs in 2010. Favorable market developments and the recently-enacted Real Estate Investment Trust Act, coupled with the PSE’s proactive marketing activities, will encourage more companies to list their shares on the PSE. The inquiries that we have so far received for REIT listings are very encouraging. It demonstrates beyond any doubt that we are making a difference in the market reforms that we have so passionately advocated as part of our strategic agenda for our stock market,” he added.

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