WITH US President-elect Donald Trump in the picture, as well as Philippine President Rodrigo Duterte and his shoot-from-the-hip style of leadership, expect the stock market in Manila to continue to reflect a volatile trading environment in 2017.
The silver lining? Well, Duterte’s economic managers may somehow deliver on their avowed commitments to keep the economy churning and growing at a more-than-respectable pace of 7 to 8 percent.
The Philippine Stock Exchange (PSE) is forecasting a 7,000-8,500-point trading range for the benchmark PSEi this year, largely depending on the policies and pronouncements Trump and Duterte will make in the year ahead.
Aside from the catalysts from political leaders, other factors that are bound to move the market are the three interest rate hikes in the US expected this year and the tailwind from the Brexit vote, PSE Chairman Jose Pardo and President Hans Sicat said.
The wide 1,500-point trading range forecast has evolved from the standpoint that the political, financial and economic ramifications of what would dominate the market are quite difficult to see at this point in time, Sicat said.
2017 marks a new twist
“2017 will start off being a highly volatile year. I think we’ll figure out how events will develop in January and February before one can give a more educated guess as to where the market will be,” he said.
“It’s very different from previous years, when you’d have an idea where, let’s say, governments and maybe even global central banks were signaling very clearly what they would do, Sicat said.
“The world, for example, two years ago, was talking about quantitative easing. Now, you don’t know which side is going to win this debate and that’s the biggest challenge,” he added.
Sicat cited the South China Sea row and the issues between China and the Philippines as the main market drivers in the early part of 2016.
The PSE officials expect the daily value turnover in 2017 to hit P8.2 billion on average, higher than the P7.81 billion recorded in 2016.
An optimistic view
Still, it behooves the PSE leadership to view the whole of 2017 with optimism. The officials said they fully support the policies of the Duterte administration.
Pardo said for Duterte, the challenges ahead are the hard ones – the reforms that are difficult but need to be done, because he has the political will. The challenge for the PSE is how to get local investors to grow their money in the stock exchange,” he said.
“We, in the PSE, believe in him, in his policies and his economic team, that they will do good. It will be a more exciting Philippines ahead,” Pardo added.
The market went through unexpected and extensive drawbacks in 2016. There was Brexit, as well as the US interest rate hike later in the year that was, the uncertainties in the economic policies of the Duterte administration, which appeared more focused on its war on illegal drugs, and the Trump victory in the US presidential race, accompanied by market jitters regarding his protectionist stance.
The PSE saw four companies debuting in 2016, against the government’s ambitious target of launching 10 initial public offerings.
Golden Haven Memorial Park Inc. raised P778 million from its IPO in June, Cemex Philippines Holdings Corp. made P25 billion in July, Pilipinas Shell Petroleum Corp. got P18.425 billion in November, and Shakey’s Pizza Asia Ventures Inc., P3.96 billion in December.