UBS still bullish on Phl equities

MANILA, Philippines - Swiss-owned global investment bank UBS said it remains bullish on the Philippine equities market, particularly in the infrastructure, tourism and mining sectors.

According to UBS analyst Jody Santiago, the country’s bourse is among the best performing in Asia, with the 30-company Philippine Stock Exchange index (PSEi) registering a price-earnings ratio (P/E) of 12.6 compared to the regional average of 11.6.

He said the PSEi is still hovering in the 4,200-level due mainly to the weak and cautious performance of major markets abroad, but added that the index can hit the 4,700-level in 2012.

He said bank’s investment recommendations are biased on conglomerates involved in “sunrise sectors” that include infrastructure (private individual or public-private partnerships), tourism, mining and, to a certain extent, banking.

UBS listed Metro Pacific Investments among its first choices as the Manuel V. Pangilinan-led group has exposures in mining, telecommunications, power, utilities and social services.

Other top choices are Puregold Price Club and Semirara Mining, while among the secondary mining choices are Atlas Consolidated, Philex Mining and Nickel Asia Corp.

Santiago said the banking sector is another good investment, especially on those with huge consumer portfolio such as top three lenders Banco de Oro Unibank Inc. (BDO), Bank of the Philippine Islands (BPI) and Metropolitan Bank & Trust Co. (Metrobank)

He added that UBS also expects more backdoor and follow-on listing due to regulatory demands and expansion programs. “Initial public offerings (IPO) may not be the order of the day.”

Earlier, UBS said that it sees the Philippine economy growing by just 3.6 percent this year, further leveling at 3.3 percent next year, before surging to 4.7 percent in 2013.

“Inflation is benign while economic growth is above average when compared to the rest of Asia,” Santiago said.

 He pointed out that reforms must be instituted, particularly in government spending next year, to draw in foreign investments to increase their share of the market.

 “Government spending on infrastructure must increase twice over, and revenue to GDP (gross domestic product) must improve,” he said. “In short, spending on investments must outpace the economic growth rate.”