Analysts see stocks buoyed by Christmas spending, IPOs
SPENDING during the Christmas season and on initial public offerings (IPO) in the pipeline is expected to inject fresh liquidity back into the stock market and lift the PSEi to the 7,700 territory at year’s end or early 2016.
Despite the global volatility posed by a US interest rate hike and a slowing China economy, the benchmark PSEi is expected to thrive on Christmas spending and the IPOs slated for the rest of the year.
“The market has potential to recover to 7,700 in the run up to Christmas and early next year, but uncertainty over the elections could bring it back down again,” Joylin Telagen, research analyst at IB Gimenez Securities Inc., said in an e-mail interview, noting that investors should start accumulating stocks with good fundamentals to ride on the yearend boost.
“For the medium-term, the PSEi can still reach an all-time high, possibly 8,450,” she added.
Alexander Adrian Tiu, equity analyst at AB Capital Securities Inc., said in a separate email interview that IPOs may provide the market with fresh liquidity.
However, the IPOs of “Metro Gaisano, Datem and Wenceslao may also sap liquidity from the market,” Tiu said.
While the PSE expects nine to 10 IPOs this year, only two have actually debuted in the market: Crown Asia Chemicals Corp. (P222-million) and SBS Philippines Corp. (P1.15 billion).
Other IPO hopefuls for 2015 include Datem (P4.65 billion), D.M. Wenceslao & Associates Inc. (P21.7 billion), Gweilo Corp. (P75 million), Green Power Panay Philippines Inc. (P290 million), Italpinas Development Corp. (P242 million), Metro Retail Stores Group Inc. (P6.1 billion), and Philstocks Financial Inc. (P185.89 million).
The market volatility is mostly from the uncertainties surrounding the Fed rate hike, Telagen and Tiu noted.
“The market usually reacts positi0vely to stability. So prolonging the rate hike may actually be negative for the markets,” Tiu said. “I don’t see the index moving back to 8,000 if foreign outflow continues.
“As long as foreigners continue to exit the equities market, it’s going to be difficult for the index to reach its previous peak,” he said.
The PSEi hit an all-time intraday high of 8,136.97on April 7, also closed at all time peak of 8,098.68.
At this point, investors should pursue undervalued and high dividend yielding stocks—the consumer-related issues—given that the country is a consumer-led economy.
“There are a lot of undervalued companies at the moment due to the heavy sell-down. Risk-averse investors should stick to blue-chips which tend to rise first if the market rebounds from its slump,” Tiu said
“Other options include investing in high dividend yielding stocks which could still provide yield even if prices go south,” he added.