Despite the residing volatility in the market, the Philippine Stock Exchange and the stock market activity remained active throughout the year. Hence, it remained a record year for the local stock market.
Year to date, the Philippine stock market has already got the taste of both worlds of having to pierce through a bull market so easily and having to land the bear market the hard way.
In fact, the Philippine Stock Exchange index (PSEi) has gone through so much volatility in the latter part of the year given the uncertainties in the global market arena.
As early as April this year, the main index was able to surpass the 7,000-mark for the first time in history and weeks after that, it managed to go past through the 7,400-point territory, tapping its 31st all time high.
According to analysts, the optimism in the market then was driven by the overall Philippine economic fundamentals that kept luring more investors to invest in listed shares.
However, after a record bull run, the Philippine stock market found itself entering the bear market some time in June as major markets around the world registered some pullback.
After recording an increase of over 27 percent as of May, the main index went down as much as 4.9 percent to 5,678.73 in June 25.
The volatility in the market prolonged up until Super Typhoon Yolanda hit the country, causing the market to succumb further into an even more instability.
On November 22, Philippine shares did not close on the green side even on a single day in a week amid the prolonged aftermath of Yolanda, the world’s most powerful storm that hit the country earlier that month.
For the five straight days, the local market has been closing on the red side with the benchmark index ending trade with a 0.62-percent decline one session, or 38.05 points to 6,084.84. This is the steepest fall of the market since closing of September 9, 2013 trade when the index plummeted toward 5,997.04
It was already then clear that the market will remain sensitive to the effects of Yolanda into the overall economic performance of the country toward the end of the year.
Market activity still intact amid volatility
Disregarding Yolanda and external movements as major wounds for the market, Jovis
Vistan, Research Head at AB Capital Securities Inc., told The Manila Times that the market hasn’t really got weaker and is just trying to soak up all the extreme gains it had for the past years.
“The market for 2013, in a nutshell, is just correcting the excesses in the past year. In 2012 and 2011, it has gone up too high,” Vistan said.
“There’s really no deterioration nor has it been weaker although some external news has tempered some expectations,” he added.
In a previous interview, Jonathan Ravelas, chief market strategist of BDO Unibank Inc., said volatility is normal in the market.
“No one could predict the amount the local stock market would go down although many expected a correction. One should look at how the various indices have rebounded,” Eduardo Francisco, president of BDO Capital and Investment, also said referring to previous corrections.
While it’s true that local share prices have been unsteady during the remaining weeks of the year, the Philippine economy still remains fundamentally sound amid challenges brought about by natural calamities.
“What is normal nowadays is for there to be corrections from time to time. One should not expect a steady smooth increase,” BDO Capital President Eduardo Francisco said in an earlier interview with The Manila Times.
Francisco also kept to its standpoint that the market remained bullish and exciting.
For his part, PSE President and Chief Executive Officer Hans Sicat said that the market remained “relatively robust” especially in terms of participation, market activity, and the onset of new products.
“It’s been a great year [for PSE]in terms of being able to put up some structural changes, few new services and product which we hasn’t done for awhile. The market activity shows higher level of confidence,” Sicat said.
”The PSE despite the volatility turned out to a very good year,” he added.
Best stock exchange in Southeast Asia
Few days ago, the PSE was named as the best stock exchange in Southeast Asia by Alpha Southeast Asia, the only institutional investment magazine focused in Southeast Asia.
“This is a very good way to cap the year which has shaped up to be one of the best years of the Exchange from a new product offering standpoint. This will inspire us to push for more products and services that will attract more investors to take part in our growth story,” Sicat said.
During the year, PSE was able to successfully launch the country’s first exchange traded funds (ETF), the Shariah program for local stocks, and a Philippine-based index futures in Singapore. The PSE also introduced the PSETradex, its own online trading platform that brokers can use to offer online trading services to their clients.
It is also preparing to launch its new and enhanced online corporate disclosure system dubbed the PSE EDGE.
On December 2, the country’s first ETF got officially listed in the local bourse.
”We are endeavoring to turn on more products and services next year. We will tweak ETF [Exchange Traded Funds] rules so we have different types,” Sicat said.
ETFs are like mutual funds except that it will be listed and traded in the stock market like any stock but instead of beating the index, it will track the performance of the PSEi.
ETFs are open-ended investment instruments and have become the world’s fastest growing asset class. ETFs are ideal for investors who want to create a diversified portfolio of stocks with lower investment cost.
“ETF gets a lot of attention so we’re optimistic about that in 2014,” Sicat said.
The bourse is also planning to bring derivative products into the country after it officially launched one in the Singapore stock exchange during the early part of the year.