Possible US interest hike overshadows market
The impending interest rate hike by the US Federal Reserve is weighing on the Philippine market, causing volatility and limiting the initial public offerings (IPO) to only four this year, a senior official of the Philippine Stock Exchange (PSE) said on Wednesday.
The capital markets are likely to said accommodate only four IPO listings for 2016, said Roel Refran, PSE chief operating officer.
There are two more IPOs expected for the rest of 2016, after the maiden offerings of Golden Haven Memorial Park Inc. (P787 million) in June and CEMEX Holdings Philippines Inc. (P25 billion) in July.
“We’re looking forward to a big deal, hopefully in the next couple of weeks,” Refran told reporters on the sidelines of the Asian Venture Capital Journal Forum on Wednesday.
“It’s already … September, we have only three more months to go. Expected will be one big, and hopefully we’ll be able to close another one,” he added.
The IPOs in the pipeline include the P29.7-billion Pilipinas Shell Petroleum Corp. IPO and the P2.6-billion Audiowav Media Inc.
Compared to the nine to 10 IPOs in the past three years, Refran said 2016 in particular is experiencing volatility and foreign selling.
Fed chair Janet Yellen said in late August that the US economy has shown stability, which strengthened the case for raising rates.
The next Federal Open Market Committee (FOMC) policy meeting is set for September 20 to 21.
“Because of the Federal Reserve rate issues, I think it’s really a question of that primarily. Monetary policy indications and the markets converged to a consensus on that – whether right or wrong, depending on the signal next week.
“That’s why we’re seeing all these funds moving out. They’re locking in their profits in anticipation,” Refran said.
Refran, however, said the Philippine market is fundamentally strong with a robust riding on the present administration’s efforts to ensure inclusive growth.
The benchmark PSE index reached 8,102.30 last July 21, its highest finish so far this year and compares with the all-time high of 8,127.48 on April 10, 2015.
Due to high valuations, most of the analysts polled earlier by The Manila Times agreed that the current volatility in the market is a corrective phase to give the PSEi a breather.