AYALA LAND, INC.’s stock went down last week as the US Federal Reserve’s tightening hit the stock market while higher interest rates battered down the property sector. Analysts advised investors to trade cautiously on property stocks.
Data from the Philippine Stock Exchange show P1.23 billion worth of 46.69 million Ayala Land shares were traded from Nov. 2 to 4. Trading days were fewer last week as the stock market was closed for public holidays from Oct. 31 to Nov. 1.
Shares in the Ayala-led property company went down by 0.6%, closing at P25.35 apiece last Friday. Year to date, the stock has gone down by 30.9%.
Analysts said that the stock market was affected mainly by the US Fed’s hawkish stance, prompting a rise in interest rates to address inflationary pressures.
The US Fed raised interest rates by 75 basis points (bps) on Nov. 2, with a total 375 bps hike since March.
“The hawkish monetary policy from the Fed and the resulting BSP (Bangko Sentral ng Pilipinas) announcements thereafter affected the property names this week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“Investors weighed the impact of higher interest rates on both the demand side — investor appetite for real estate — as well as the supply side — potentially higher development costs,” he added.
Despite Ayala Land’s step toward renewable energy by planning to add electric vehicle (EV) charging hubs in its residential properties, analysts said the news was “shrugged off” by investors ahead of the actual revenue contribution.
Jones Lang Lasalle Philippines Head of Research and Consultancy Janlo de los Reyes said the property sector might see a slowdown in residential markets due to high interest rates.
While big developers such as Ayala Land are expected to be more resilient in funding new projects next year, small developers might feel the pressure due to limited cash supply.
“Higher interest rates and commodity prices will make it more expensive for property developers to build. Thus, the net impact would be a contraction in margins, ceteris paribus,” Mr. Limlingan said.
He advised investors to monitor how aggressive Ayala Land is with its planned residential launches next year as this will show how confident the company is on the property industry rebound.
In an e-mail exchange, IB Gimenez Research Securities, Inc. Research Head Joylin F. Telagen advised investors to trade or invest cautiously, especially property stocks, as the sector is on a downtrend.
“Technically, [Ayala Land] was a breakdown from its long-term trend,” she said, adding that on a “conservative note, it’s better to wait until its back to its long-term uptrend as the risk of stagflation lingers.”
She said if it fails to break out from its trend resistance of around P30.55, the downtrend might continue.
In the second quarter of the year, Ayala Land posted a 64.6% rise in net income to P6.09 billion, bringing its first-half income to P10.15 billion or higher by 37.7%.
Ms. Telagen projected the company’s third-quarter income at P3.5 billion, coming from a low base, and its full-year income at P15 billion.
She placed Ayala Land’s support and resistance levels at P22.55 and P30.55, respectively.
“There will be some headwinds because of the high CPI (consumer price index) and interest rate environment we are experiencing,” Mr. Limlingan said. He said some might be borrowing ahead of higher interest rates while others might be cutting down costs early.
He placed the stock’s support and resistance levels at P22.50 and P27.50, respectively. — Bernadette Therese M. Gadon
