Boom not slowing down
Property development will remain scorching hot next year, prompting real estate developers to pump in more investments.
A beneficiary of the bright outlook is Italpinas Development Corp. (IDC), which has gained a significant financial boost through a private placement, securing over P188 million from a strategic investor.
Businessman Benjamin Tan Co, recognized for his ventures in petrochemicals, steel manufacturing, and other industries, acquired a 15 percent stake in IDC’s primary shares at P1.99 each, amounting to approximately P188 million.
The transaction follows IDC’s 2022 stockholders’ approval to sell up to 20 percent of its new primary shares to an investor.
“With his years of experience and reputation in the business community, Co will be a great partner as IDC continues to grow,” IDC chairperson and CEO Romolo Nati said.
“The Philippine economy has a bright future, particularly in real estate outside Metro Manila. IDC is a perfect partner for developing my property portfolio,” he added.
Known for its focus on emerging locations and sustainable development, IDC plans to expand into new areas and venture into the tourism and hospitality sector.
The company has partnered with Co through a co-development agreement signed in June for a property in Puerto Princesa.
Prepare for Trump 2.0
Donald Trump’s second coming, slated in two months, has a lot of investors feeling nervous, since there are certain variables that may cause serious business disruptions, such as his threat of as much as a 60 percent tariff on all goods coming from China and 20 percent elsewhere.
The impact on emerging markets (EMs) will be mainly through the forex markets, and it has been uneven, according to Bloomberg’s Global Insight.
AP Securities said the peso has weakened by 0.71 percent since Trump’s election but has held up relatively well compared to its peers in the region.
Major currencies in EMs have declined by as much as five percent since Trump’s election on November 5, but the shock of a soaring US dollar is hitting some currencies harder than others.
Among the currencies that have taken a hit are the Malaysian ringgit and Thai baht, which are viewed to be vulnerable to a drop in US trade or remittances, or provide a narrow differential to US interest rates.
In contrast, the least affected currencies (e.g., Egypt and Turkey) are from countries with high interest rates.
However, the local equities market has declined by 8 percent over the same period, which seems exaggerated, according to AP Securities.
Foreign selling has weighed down on the local market, with foreign flows turning negative just before the elections and picking up after 5 November.
The Philippines should be relatively insulated from the impact of Trump 2.0, given that it is more domestic-oriented. If anything, the concern should be that the Philippines has one of the narrower interest rate differentials compared to US rates, but the peso has held up relatively well.
Thus, while we expect the BSP to cut its rate by another 25 basis points before the year’s end, we have put our expectations of a 100 basis points (1 percent) rate cut for next year on review.