AYALA Land, Inc.’s share price dipped last week as the market stayed on the sidelines after the Morgan Stanley Capital International (MSCI) rebalancing and as the property sector remained affected by more expensive borrowing costs.
The property developer was the fifth most actively traded issue last week with a total of 52.21 million worth P1.34 billion changing hands from June 5 to 9, data from the Philippine Stock Exchange showed.
Shares in the Ayala-led company finished at P24.85 apiece last Friday, down by 4.2% from its June 2 close. Since the start of the year, shares have declined by 28.4%.
“From the looks of it, investors are still risk-on mode in the property sector in general due to the high interest rate environment,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in an e-mail.
“In fact, we have seen market participants lightening key index constituents [last] week. If anything, this may be a spillover from the recent rebalancing in which Ayala Land is on a downweight,” he added.
Mercantile Securities Corp. Head Trader Jeff Radley C. See attributed Ayala Land’s share price movement to the MSCI rebalancing, which took effect on June 1.
He said the past few weeks were the outcome of the rebalancing where an outflow was triggered by fund managers who mimic the MSCI.
“Next week, it will be the FTSE rebalancing where there will be an outflow on Ayala Land,” Mr. See said in a Viber message.
Ayala Land is among those included in the MSCI rebalancing. As of May 31, the company had an index weight of 7.78%, with a market capitalization of $3.46 billion.
The index is designed to measure the performance of the large and mid-cap segments of the Philippine market. Some fund managers track the MSCI index composition to realign their portfolios. With 15 constituents, the index covers about 85% of the local equity market. It is reviewed and rebalanced twice a year.
At its policy meeting on May 18, the Monetary Board kept its benchmark interest rate unchanged at a 14-year high of 6.25%. Interest rates on the overnight deposit and lending facilities were also maintained at 5.75% and 6.75%, respectively.
The Bangko Sentral ng Pilipinas has raised borrowing costs by 425 basis points since May last year to temper surging inflation.
For the fourth straight month in May, inflation subsided to a one-year low of 6.1%. However, this remained elevated still as it marked the 14th straight month that inflation breached the central bank’s 2-4% target range.
In the first quarter, Ayala Land’s revenues grew 25.5% to P30.91 billion amid higher contributions from all its business lines. Its after-tax net income climbed by 27.8% to P5.19 billion in the first quarter from P4.06 billion in the same quarter a year ago.
“We project a double-digit growth on Ayala Land’s bottom line, just above P27 billion for 2023,” Mr. Limlingan said.
Mr. See expects investors to continue to experience selling pressure as funds will try to move their holdings.
“Ayala Land just broke its support at P25.90 per share and closed at its low of P24.85 per share. It will continue its selling pressure and might hit P24.00 per share,” Mr. See said.
Mr. Limlingan plotted the key levels at P23.00 per share for the support, and P26.00 per share for the initial resistance. — Lourdes O. Pilar
