Stock market operator targets 3 IPOs this year

By Revin Mikhael D. Ochave, Reporter

THE Philippine Stock Exchange, Inc. (PSE) is targeting three initial public offerings (IPOs) and four real estate investment trust (REIT) listings this year, despite market uncertainty amid the pandemic.

PSE President and Chief Executive Officer Ramon S. Monzon said he chooses to be optimistic for 2021, amid a “fragile” economic environment due to the unpredictability of the coronavirus disease 2019 (COVID-19) pandemic.

“We are confident companies will be enticed to list given the revised listing rules for REITs, and even more once we receive SEC approval on our proposed amendments to the Main and Small, Medium, and Emerging (SME) Board listing rules,” Mr. Monzon said in a statement sent to reporters (Related story: PSE plans short selling program, new sector indices).

“We expect companies to return to the stock market as the local economy recovers from the impact of this pandemic,” he added.

DDMP REIT, owned by DoubleDragon Properties Corp., is set to make its stock market debut this year. DDMP REIT is looking to raise P14.71 billion, with listing date scheduled on Feb. 26.

“We have a number of follow-on and stock rights offerings in the pipeline which include $20 million and $250 million DDS offerings of Cirtek Holdings Philippines Corp. and Cebu Air; and the P5-billion SRO by AC Energy Philippines,” Mr. Monzon said.

In 2020, the total amount of capital raised at the PSE reached P104 billion, up 2.9% from the P101 billion logged in 2019. Broken down, P44.3 billion was raised through IPOs; P41.2 billion from follow-on public offering: P12.8 billion from stock rights offering; and P5.6 billion from private placements.

STOCK MARKET OUTLOOK
Mr. Monzon said he expects a better market performance this year, with the economy expected to begin its recovery. However, he admitted it will be a challenge to regain investor confidence.

“The government’s announced plan to start local mass inoculation to fight COVID-19 starting the second half of 2021 would enable the lifting of all restrictions, prompt a strong rebound in corporate earnings and thus allow the economy to take off. But understandably, the discovery of a new COVID-19 strain in the United Kingdom and the United States might put a dampener on investor sentiment again and that is why we are cautiously optimistic,” he said.

In an e-mail interview, Timson Securities, Inc. Head of Online Trading Darren Blaine T. Pangan said the stock market’s performance will depend on the spread of the new COVID-19 strain in the following months, and on the possible return of strict quarantine measures around the world.

“Over the short-term, the market may experience some correction with 6,800 being the nearest major support area which we have to observe if it does hold. On the other end, the local bourse may also try to retest its nearest resistance at 7,600,” Mr. Pangan said.

A new and more infectious COVID-19 variant was discovered in the United Kingdom (UK), which prompted several countries to reinstate lockdowns and to implement travel restrictions.

AAA Southeast Equities, Inc. Research Head Christopher John Mangun said he can see the benchmark Philippine Stock Exchange index (PSEi) breaking above 8,000 level in 2021.

“All projections for 2021 rely on the current economic condition’s improvement which brings several factors into play, with the main concern being how soon vaccines can be administered before the virus mutates and becomes more dangerous,” Mr. Mangun said in an e-mail.

China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said the market may reach around the 7,500 to 8,000 level this year, driven by economic developments.

“We continue to expect some volatility in the coming year, as primarily driven by developments around the pandemic, vaccine rollout, and earnings performance,” Mr. Mercado said in an e-mail.

Online brokerage firm 2TradeAsia.com said in a market note that it expects the local bourse to reach the 8,000 level. “Fingers are crossed for 2021 to be a year for repair and recuperation, at a time when the ‘lockdown economy’ is being threatened anew by a mutated strain of COVID,” 2TradeAsia.com said.

Meanwhile, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said it may be premature to predict the market’s performance, adding that the new COVID-19 variant has created uncertainties for investors.

“In the near term, the market will continue its positive momentum as a number of vaccines have been approved for use. However, a thing that must be closely monitored is the new COVID strain’s extent on the global scenario,” Mr. Pangan said in a mobile message.

KEY SECTORS
Timson’s Mr. Pangan said the telecommunications sector will continue to perform well this year, as classes continue to be held virtually and employees work from home.

AAA Southeast Equities’ Mr. Mangun said holding firms, with support from telcos, will lead the entire index, along with retail food manufacturers and distributors.

“Property and banking issues will remain laggards until bad loans are absorbed and lending as well as property sales picks up,” Mr. Mangun said.

For China Bank Securities’ Mr. Mercado, the consumer and real estate sectors may see growth.

“Investors should watch out for the continuing recovery in remittances, improvement in consumer and business confidence, and uptick in consumer spending against a backdrop of benign inflation and dovish monetary policy — as these are positive catalysts which should buoy corporates’ earnings recovery,” Mr. Mercado said.

“If the pandemic remains controlled, restrictions are further eased and the vaccine is rolled out swiftly, then we expect better performance across the sectors in the coming year,” he added.