Philippine market one of top 3 JP Morgan picks for 2013

By Doris C. Dumlao

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Global investment bank JP Morgan has picked the Philippines as one of its three most-favored stock markets for 2013, marking the fourth straight year that the local bourse is expected to outperform most of its regional peers.

“We are still very bullish for 2013,” JP Morgan Securities Philippines Inc. executive director and head of equity research Gilbert Lopez said in a press briefing on Monday. The two other Asian markets seen by JP Morgan as top market picks for next year are Thailand and India, citing favorable demographics as a common denominator with the Philippines.

At the beginning of 2012, JP Morgan’s emerging market and Asian equity strategist Arian Mowat also cited the Philippines as among its most favored markets along with Thailand and Indonesia. This year, he said the Philippines was still on Mowat’s favored list.

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Lopez said JP Morgan had an “overweight” rating on Philippine equities for the last four years. An “overweight” rating refers to a recommendation to buy in excess of the prescribed weight in a closely followed index like MSCI Asia ex-Japan, which JP Morgan expects to rise by 15 percent next year.

JP Morgan does not target local indices like the Philippine Stock Exchange index but Lopez said that based on its price targets on monitored stocks, the PSEi might have room to rise by another 20-25 percent from current levels. The company covers 30 Philippine stocks, at least 27 of which are part of the PSEi.

“The reason we like the Philippines is that in a global context, earnings environment is still good,” Lopez said, adding that JP Morgan was expecting average earnings per share in this market to grow at a faster pace of 17 percent next year from about 12 percent this year.

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PH stock market skyrockets to new record high

By: Doris C. Dumlao
Philippine Daily Inquirer

MANILA, Philippines—Local stocks skyrocketed to an all-time high on Monday as investors loaded up on equities given positive tidings from the resolution of the Greek crisis and an optimistic outlook for the second half of 2011.

The main-share Philippine Stock Exchange (PSE) index surged by 69.93 points or 1.6 percent to finish at 4,421.56.

Drawing momentum from last Friday’s breakout past a critical barrier at 4,340, the index surpassed the 4,414 previous record high in early November last year to carve a new peak.

An upbeat trading on Wall Street on Friday likewise added to the bullish sentiment.

Also on Friday, the Dow Jones Industrial Index rallied by 168.43 points or 1.36 percent to finish at 12,582.77 on news that Greece had successfully passed in its Parliament the belt-tightening measures required to execute a bailout package.

At the local market, index heavyweight PLDT was back on the game on hopes that the Securities and Exchange Commission would soon be able to address uncertainties on the telco’s foreign ownership structure.

Value turnover was heavy at P7.28 billion, suggesting conviction to run-up to a new record high.  There were nearly three gainers for every single decliner.

Apart from PLDT, Metrobank, AGI, San Miguel, Atlas, EDC, PNB, Philex, BPI, Megaworld, ICTSI, FLI, Aboitiz Power, URC, RLC, Petron, BDO, Metro Pacific Investments and Ayala Land edged higher.

PNB, which was among the day’s top gainers, rose by 6.17 percent on news that Chinese banking giant was in talks with principal shareholder Lucio Tan to come in a strategic investor in Allied Bank in exchange for the opportunity to expand distribution network in mainland China. PNB expects to resolve the stumbling blocks to its planned merger with Allied Bank within this year.

Petron continued to sizzle on expectations that the oil company may undertake a secondary shares offering soon to comply with the minimum public float at the PSE. Parent firm San Miguel also continued to benefit from brisk trading.

Atlas, on the other hand, was buoyant on news that SM Investments had approved an equity investment in the mining firm, bringing tycoon Henry Sy’s total equity position (including the shares held by Banco de Oro) to about a fifth of total stocks.

Foreign research firm says RP stocks still undervalued

By Doris Dumlao Philippine Daily Inquirer Most Read MANILA, Philippines—The Philippine stock market remains undervalued and should benefit more from a domestic consumption and overseas Filipino workers’ remittance play in the years ahead, according to a research by foreign stock brokerage CLSA. In a report titled “People, People and More People” dated Aug. 23 and written by CLSA Asia-Pacific Markets head of research Alfred Dy, the country’s population base is seen swelling to 147 million by 2040 based on a conservative growth rate of 1.5 percent a year. But over the past 51 years, Dy noted that population grew at a faster rate of 2.4 percent a year. Assuming such rate is sustained, he said the population could more than double to 192 million in 2040. The Philippines has a population base of 94 million, which is already the 12th biggest in the world, Dy noted, adding that 47 percent of these people were below 21 years old. “Simply put, more people in the coming years should mean more consumption,” said Dy, who heads a team that was recently ranked as the number one All-Asia Research Team for 2010 by global finance magazine Institutional Investor. Based on this strategy, CLSA recommended a “buy” on nine publicly listed companies that it considered “winners” in a domestic consumption and OFW play: SM Investments Corp., Universal Robina Corp., Alliance Global Group Inc., Ayala Land Inc., Megaworld Corp., Filinvest Land Inc., Vista Land & Lifescapes Inc., Metrobank and Banco de Oro. UNIVERSAL ROBINA CORP.: Labor Productivity Benchmarks and International Gap Analysis (Labor Productivity Series) Consumption is the biggest component of the Philippines’ $160.9-billion gross domestic product (GDP), broken down as follows: consumption (70 percent), investments (16 percent), government (10 percent) and net exports (4 percent). “It is also worthy to highlight that the country’s per capita GDP and national savings rate have been rising since 1987,” Dy said. Per capita GDP was at $1,818 from only $536 in 1986. National savings rate, on the other hand, was now estimated at 30.3 percent from only 22.7 percent in 1986. “On both counts, these figures clearly are strong foundations for higher consumption ahead. Of course, more Filipinos in the coming years mean more supply of OFWs,” Dy said. “This scenario becomes more realistic given the aging population in the developed markets. Simply put, the aging population around the globe should create gaps in the global labor market, which would be filled by the OFWs,” he said. In the stock market, Dy said the best way to play the domestic consumption theme would be through SMIC, AGI and URC, respectively led by tycoons Henry Sy, Andrew Tan and John Gokongwei Jr. “Of course, more people in the coming years would require more housing units and the best way to play this theme would be via ALI, Megaworld, Vista Land, and Filinvest Land. In fact, we consider these property companies as quasi-consumer plays,” Dy said.

Published in Phillippine Daily Inquirer August 30, 2010.