Bullish on Philippine stocks

Font Size
FINEX Folio — By J. Albert Gamboa-125


2019, the Year of the Earth Pig, will be a year of abundance and positive vibes according to Oriental astrology. Its immediate predecessor was 1959, when the Philippine post-war economy was flourishing under then President Carlos P. Garcia, who pursued the “Filipino First” policy. Like 1959, 2019 is also a midterm election year in the country.

On New Year’s Eve 2018, the city government of Taguig and Bonifacio Global City (BGC) teamed up to host the grandest countdown in town. For the first time, it was staged along the strip of BGC’s Fifth Avenue between the new Philippine Stock Exchange (PSE) headquarters, One Bonifacio High Street Mall, Shangri-La at the Fort, and High Street Central.

Heavy rains did not dampen the BGC celebration, which could become an annual tradition and serve as Manila’s counterpart to the iconic ball drop at Times Square in New York City. It also signaled BGC’s emergence as the country’s premier financial district rivaling Ayala Avenue in Makati City, which has discontinued its New Year’s Eve countdown festivities since 2013.

Aside from the PSE, other financial institutions and some government agencies have transferred or are planning to transfer their main offices to BGC. In many cases, the site of a stock market is a magnet for investors and locators from both the public and private sectors. Classic examples are Binondo district in Manila, Ortigas Center straddling the cities of Mandaluyong and Pasig, as well as the Makati central business district.

Studies on stock market performance during presidential election years abound, but not for midterm election years. There has been no clear pattern yet judging from the last four midterms: local stocks declined in 1995 and 2001, while they rose in 2007 and 2013 based on the PSE index (PSEi) yearly returns.


However, major banks and financial services companies are generally more optimistic about 2019 compared to the previous year – despite the 12.8% drop of the PSEi year-on-year. Their bullish outlook is attributed to election year spending, declining oil prices, a deceleration in the inflation rate, and infrastructure buildup.

With regard to initial public offerings (IPOs), the PSE is poised to have several listings this year. In contrast, there was only one IPO in 2018 by way of D.M. Wenceslao and Associates, while San Miguel Food and Beverage had a follow-on offering.

Forthcoming IPOs in the pipeline include Del Monte Philippines, Cal-Comp Technology, Philippines Air Asia, Big Chill, Okada, Figaro’s parent company Camerton, HatchAsia, and WAV Media.

Elsewhere in Southeast Asia, Vietnam was the top grosser last year with total IPO proceeds of $2.6 billion, followed by Thailand at $2.5 billion and Indonesia at $1.2 billion. Perennial topnotcher Singapore plunged to fourth place with only $500 million.

After the PSEi’s 12.8% year-on-year retreat to bear territory in 2018, there’s no way to go but up for the Philippine equities market in the current election year.


J. Albert Gamboa is CFO of the Asian Center for Legal Excellence and Chairman of the FINEX Media Affairs Committee’s Golden Jubilee Book Project.