RP composite index may hit 3,800 in second half

The Philippine Stock Exchange index (PSEi) is expected to reach the 3,800 level in the second half due to a resurgent US economy and as more companies go public, First Metro Investment Corp. said on Monday. “Any initial public offering (IPO) would be welcome in the first half. But we are expecting IPOs [to take place] in the second half of the year as many companies are still waiting for the elections [to finish]," Eduardo R. Banaag, Jr., FMIC vice-president for investment advisory, told a press briefing. Companies held back from listing stocks for the first time last year due to lingering market uncertainties, which resulted in relatively low share prices. According the Metrobank Group’s investment banking arm, the Philippine Stock Exchange index would likely rise by a tenth to 3,360 in the first half, as a result of low interest rates and as US stocks recover. Banaag said the US economy would continue to recover, boosted by the Obama administration's stimulus spending. And as it recovers and the profits of listed companies rebound, the Standard and Poor’s 500 index could rise to 1,225, he added. US stocks managed to end the first trading week in positive territory, with the Dow industrials and S&P 500 at 15-month highs and the NASDAQ composite at a 16-month high. The PSEi closed at 3,087.35 yesterday. It ended 2009 at 3,052.68, rising by almost two-thirds from a year earlier “The influence of the US stock market on the Philippine stock market will persist," Banaag said. He noted that in the past, the rise and fall of the US stock market had accounted for as much as three-quarters of the rise and fall of local share prices. He said he does not expect a major policy decision taking place in the first half that would alter the low interest rate environment in the US. For his part, FMIC President Francisco C. Sebastian said more companies would get listed as soon as the the law giving incentives to real estate investment trusts gets enforced. Its implementing rules are still pending. Corporate issuances, on the other hand, are expected to slow down this year, siad Carmelo L. Bautista, FMIC executive director. “We foresee a a slowdown in the corporate issuances by the second quarter because of the wait-and-see posture due to the elections in May," he said. Meanwhile, the law that encourages individuals to invest for their retirement would likely boost local capital markets, Sebastian said. Under the enacted in August 2008, individuals can set aside as much as P100,000 a year in a personal retirement account, and the funds will be invested in a wide range of instruments. — BusinessWorld