MANILA, Philippines – The Philippine Stock Exchange (PSE) initially expected new listings in 2015 would reach a whopping P200 billion.
After all, it did appear like an easy target with already half of the amount, or P104 billion, achieved as early as end-June.
Indeed, an optimistic Hans Sicat, the president of the PSE, said the target could be reached by the end of 2015.
But as in any other stock market, nothing is really certain in equities. In the end, the figure amounted to P184.6 billion, lower than the earlier estimate, but still 20.9 percent higher than 2014’s P153.08 billion.
Market volatility prevailed as global uncertainties were brought about by developments mainly in Greece and China.
As such, the benchmark Philippine Stock Exchange index (PSEi) finished at 6,952.08 on Dec. 29, the last trading day for 2015. This was down 3.85 percent from 2014’s closing level of 7,230.57.
News of renewed uncertainties from Greece started to come in the middle of the year, with the much-debated bailout package sought by the debt-ridden European country.
Greece’s debt crisis started as early as 2010 and over the past five years, 344 billion euros have reportedly flowed to Greece from official creditors such as the European Central Bank and the International Monetary Fund to help the ailing country and its commercial banks.
The creditors and the government of Greece were locked in debates on the actual conditions for a new Greek rescue.
As part of the agreement, Greece must push through parliament a series of cuts and reforms, including divisive overhauls of its pension and tax system.
Analysts said the developments in Greece affected perception and put a dent on investor confidence.
Another issue sent investors jittery was the move of China to devalue its currency, the yuan.
On Aug. 11, China started three consecutive devaluations of the yuan, knocking over three percent off its value.
Many believe it was China’s attempt to boost exports in support of its slowing economic growth although the state-run People’s Bank of China said the devaluation is all part of reforms as the nation moves toward a more market-oriented economy.
Due to these two major developments, market volatility prevailed in the most part of the second half of the year.
In the end, only four companies managed to list in the local stock market in 2015.
These are Crown Asia Chemicals Corp., a pipes and plastic compounds manufacturer; SBS Philippines, a chemical trading company; Metro Retail Stores Group, the Cebu-based retailer; and Italpinas Development Corp., a green property company.
Two construction giants – DM Wenceslao and Datem Corp. – originally slated to list this year, put off their scheduled market debuts because of the prevailing market volatility.
This year, however, Sicat is optimistic there would be at least eight to 10 IPOs and that these fund raising activities may finally reach P200 billion.
Companies expected to list include D.M. Wenceslao, Datem, Philstocks Financial Inc., Pointwest Technologies Corp. and Gweilo Corp. Several other companies are in the pipeline including a mining company and possibly oil giant Pilipinas Shell Petroleum Corp., which is targeting to list either before or after the May elections.
Sicat said the May elections bode well for many companies.
“The May elections are good for consumer spending so that sector always benefits. The media (industry) benefits quite well from elections. And I think even the current increase of government spending in infrastructure-related projects and all other infrastructure-related projects of the private sector are going to do well. These means that you have a lot of positive multiplier effects for the economy,” he told reporters recently.
At the same time, he said there might be more listings in the first quarter of the year and in the third and fourth quarters when the elections are over.
“There might be a slight slowdown in the second quarter because people are waiting for election results.There there would be another round of activity in the third quarter,” Sicat said.
Sicat believes even though external volatility plagued the market last year and that there might still be volatility because of the interest rate increases started by the United States Federal Reserve last month, local expansion of companies would compensate for the volatility and consequently keep investors in the market.
Other fund-raising activities include follow-on offerings, backdoor listings and private placements.
As for companies’ individual expansion programs in 2015, Market Insight, a report published by Pinnacle Real Estate Consulting Services Inc., noted most companies had big projects last year.
“The Ayala Land Group leads the biggies by building townships all over the country. The group generated revenues from property development reaching P75.1 billion for the first nine months as compared to the same period last year of P68.3 billion or 10 percent higher. This includes the sale of residential lots and units, and office spaces, as well as commercial and industrial lots. Leasing revenues, which includes the operation of shopping centers, offices, and hotels and resorts, reached P17.2 billion, or 12 percent higher than the P15.4 billion recorded last year,” said Jojo Salas, director for research and consulting of Pinnacle Real Estate.
The SM Group also dominated the market, the report said.
“The group is securing its top position in the retail market. By the end of 2015, the SM Group will have 55 malls in the Philippines, the largest in the country, and even have six malls in China, for a total estimated gross floor area (GFA) of 8,269,486 square meters. Recurring income has been the focus of the Group, even securing stable income from office buildings,” it said.
Likewise, the report cited the success of Megaworld Group, which has been busy with its five new townships all over the country.
“The group also announced its intention of catching up in the retail mall segment by building 20 malls in the next five year. In terms of clearing up inventories, it reported to have sold around 80 percent of the 788 residential lots in its 62-hectare Alabang West development. This resulted in a rapid increase in land values to P56,000 per sqm from P47,000 per sqm, or 19 percent appreciation in just 11 months after the launch of the subdivision,” the report also said.
Another major player cited by the report is Vista Land Group, which unveiled 27 projects in the previous months that may rake in P20.7 billion of sales, plus the additional planned launches with estimated sales value of P15 billion.
“The Vista Land Group has been beefing up its AllDay and AllHome retail platforms to drive recurring income. The group is also including office spaces in its offering presumably to get a slice of the BPO market. The Vista Land Group also made inroads in the health care business with its 100-bed hospital project in the Daang Hari vicinity,” it also said.
Likewise, the report cited the Consunji-led DMCI Group, which aims to launch nine projects next year with approximately 14,000 units and estimated sales value of P50 billion.
Indeed, 2015 has been busy for listed companies and their investors. And even with the prevailing volatility, it was another year that successfully comes to a close.
Souce: The Philippine Star | January 2, 2016
