‘Before I step down’
President Benigno Aquino 3rd said he hopes to see the Philippine stock market reaching “greater heights” than its current record levels before the end of his term, trading in the 9,000 to 10,000-point range toward 2016.
The benchmark index of listed companies has been breaking records, with the Philippine Stock Exchange index (PSEi) passing the 8,100-point mark for the first time last week and settling at an all-time high of 8,127.48 on Friday, April 10.
Around the same time last year, the index stood at the 6,600-point level – which marks a 22 percent gain over a 12-month period to April 10 this year.
“I expect to ring the bell in celebration of the index breaching 9,000 and 10,000 points, hopefully before I step down,” Aquino said in a speech during a special bell ringing ceremony at the PSE on Tuesday morning.
Aquino reiterated he “remains bullish” on the prospects of the country’s economy, mirrored by the market’s recent highs, consecutive investment grades from global ratings agencies, benign inflation and other positive factors that lift investor confidence in the Philippines.
“I have been bullish on the Philippines long before we regained our prominence in the global economy, long before we achieved investment grade, and long before the all-time highs the PSE index has recorded,” Aquino said.
The President is urging the various sectors of industry, commerce and society in general to contribute to the economy even with the change in administration next year.
“Having seen what our countrymen can accomplish, you also know that there is no reason we cannot reach greater [heights],” Aquino said.
“I sincerely believe that next year, Filipinos will choose wisely, and will choose someone who will, likewise, tread the straight path,” he added, referring to the election of a leader who will replace him.
PSE Chairman Jose Pardo said the much higher index range Aquino mentioned will serve as a target for the bourse by end-2015 or early next year.
“It is attainable, but we have to work doubly hard and hope that no external forces will affect it. But certainly, the reality [or more realistic target]is 8,300, 8,400, and up to a maximum of 8,500 [by end-2015],” Pardo told reporters after the ceremonies on Tuesday.
“We told the president to just remain focused. ‘We, in the business community, have faith in your leadership. We’re convinced that the best is yet to come.’ Now, if it’s 9,000 to 10,000 [that you want], we’ll try to set it as a target. We hope we could inch closer. But as of this time, 8,000 is already a reality,” he added.
In the first quarter of 2015, the stock market accounted for a 53 percent share of total investment in the Philippines, growing from last year’s 50 percent, while foreign investment brought in 47 percent, down from 50 percent in 2014, Pardo said.
“There is confidence in the reforms that are being introduced. Local investors are pursuing the right path of forming and freeing the market, deregulating and making it globally competitive.”
“Foreign investors are still jumping up despite what they say that the PE [price to earnings]ratios are slightly higher at 20 percent [20x], but we’ll look at it from a different perspective,” he added. The PE ratio for this year is pegged at a “fairly competitive” 21x to 22x, he noted.
Upbeat on pre-election spending
The PSE chairman said the market is set to remain “bullish” during the pre-election period on ramped up infrastructure investment, housing and other capital spending, as well as support provided by overseas remittances.
Pardo added that market trends are expected to normalize after the 2016 election.
In the first three months of 2015, the volume of transactions on the equities market expanded by 40 percent to P641.59 billion from P457.08 billion a year earlier.
The average daily turnover surged 47.5 percent year-on-year to P10.87 billion.
The overall market capitalization of all listed firms grew 17.6 percent to P14.98 trillion from P12.74 trillion, and net foreign buying swelled 182 percent to P48.87 billion from P17.33 billion.
On Tuesday, the benchmark PSE index started off on a positive note, but eventually gave in to profit-taking pressure given recent highs, pushing the PSEi down 16.76 points or 0.21 percent to finish at 8,056.49. The All Shares shed 10.84 points or 0.23 percent to 4,605.92.