PSEi caps off year 2019 in red, rises 4.7% YoY

The Philippine Stock Exchange Index (PSEi) rounded 2019 below the psychologically important 8,000 level.

The local stock barometer finished 2019 in the negative territory, declining 0.35 percent to settle at the 7,800 level as investors maintain a wait-and-see mode heading on to 2020, defying projections it could end the year at the 8,000 level.

The Philippine Stock Exchange index (PSEi) receded 0.3 percent or 27.02 points at 7,815.26 on Friday, 27 December, concluding a roller-coaster ride of a year marked with uncertainties in the global market and the impact of the delayed national budget.

“Philippine equities traded lower in its last trading session for 2019, driven in part by window dressing, investors wanting to remain on the sidelines while the market is closed for five days, and flows into other regional markets,” head of sales for Regina Capital Development Corp. Luis Limlingan said.

Nevertheless, the main index eked out a 4.7 percent year-to-date growth after ending 2018 at 7,466.02 amid market volatility fueled by soaring inflation in the latter part of last year. Still, the PSEi missed forecasts it could end the year between the 8,400 to 8,600 range. This year, the PSEi traded to a low 7,400 and a high of 8,400.

The local equities market’s capitalization also rose 0.3 percent to P13.95 trillion, even after decline in the share price of index stocks of companies involved in the water business, after water firms stood at the receiving end of President Rodrigo Duterte’s ire over “onerous” provisions in the concessionaires’ contracts.

“The PSEi still had a decent finish despite the hefty decline in the share price of index stocks in the water distribution business. We hope that the issues concerning their sector will soon be resolved to lessen market jitters,” PSE president and chief executive officer Ramon Monzon was quoted as saying at the bourse operator’s bell-ringing ceremony capping off 2019.

The PSE said daily average turnover this year registered at P7.29 billion, inching up from P7.15 billion in 2018. Net foreign selling for the whole year came at P14.5 billion, down significantly from P61.01 billion last year despite uncertainties in the water business and the MSCI rebalancing which reduced the weight of several local companies.

Meanwhile, the Philippine equities market raised total capital amounting to P95.22 billion, only about half of the P187.84 billion raised in 2018.

“The capital raising number this year was affected by issuers’ opting to tap the bond market or postponing their fund-raising plans. Also, two banks accounted for 60 percent of the capital raised in 2018 and we did not have similar big deals this year. We hope next year’s capital raising pipeline will be more robust,” Monzon said.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco projects upbeat trading at the start of 2020 due to bargain hunting and better trading environment.

“We still have a lot of index stocks which are at bargain levels trading below their five-year price-to-earnings ratio average. At the same time, we anticipate a better year ahead for the market with interest rates at low levels and global narratives being supportive particularly the United States-China phase one deal,” Tantiangco said in a text message.

“These may induce investors to take positions giving the market a boost by the start of 2020.”

For its part, BPI Securities sees the market clutching the 9,000 mark in 2020 on the back of robust earnings growth, particularly in the banks, property and consumer sectors. BPI Securities president Haj Narvaez also earlier on said the stable macroeconomic environment supports such forecast.

Defying a sluggish 2018 where only Aseana developer D.M. Wenceslao & Associates Inc. went public, this year saw four companies debut on the market, including Kepwealth Property Philippines Inc., Axelum Resources Corp., the Villar family’s AllHome Corp. and Fruitas Holdings Inc., signifying a return of appetite for the domestic market.