MANILA, Philippines — The country could see more initial public offerings (IPO) in the second half if the market sustains trading at the 8,000 level, a leading stockbrokerage said.
“If we sustain the 8,000 level, maybe by the third or fourth quarter the IPOs will come out,” Philstocks Financial Inc. research analyst and engagement officer Piper Tan told reporters.
The benchmark Philippine stock exchange index (PSEi) ended near the 8,000 mark in the first half of 2019 at 7,999.71, up 7.15 percent from the 7,193.68 in the same period last year.
On Friday, the PSEi closed at 8,117.94, a 0.66 percent rise or 53.02 points higher than the previous trading day.
Tan said companies are still on a wait and see stance when it comes to launching their IPOs, taking the performance of the economy into consideration.
“For now, those with intentions to go into IPO are AirAsia, Big Chill and Cal-Comp,” Tan said.
Last month, The Big Chill Inc. said it would proceed with its IPO but is just waiting for the right timing. It added that it is also waiting for the infusion of Tullys Coffee Asia Pacific into the company before proceeding with the IPO.
In May, AirAsia Group CEO Tony Fernandes said the company is targeting to launch the IPO of its Philippine unit this year, driven by the improving performance of the company.
AirAsia planned to raise as much as $250 million through an IPO in 2018, proceeds of which would be used for the firm’s expansion.
The company, however, deferred its IPO plans last year due to the impact of high fuel prices and the weaker Philippine peso.
Similarly, consumer electronics manufacturer Cal-Comp Technology (Philippines) also deferred its P6.77 billion IPO last year due to volatile market conditions.
The company, however, announced earlier this year that it plans to proceed with the IPO in the third quarter of the year.
Philstocks said it projects the PSEi to reach the 8,500 mark by year-end, driven by slowing inflation and more accommodative government policies.
“The assumption that the PSEi would reach 8,500 is based upon first, the slowdown in inflation,” Philstocks Financial Inc. senior research analyst Japhet Tantiangco told reporters.
Inflation eased to 2.7 percent in June, the lowest since hitting 2.6 percent in September 2017, according to the Philippine Statistics Authority.
Philstocks said it estimates inflation to hit 2.5 to three percent this year, lower than its earlier 4.5 percent to 5.5 percent projection.
Tantiangco said slower inflation coupled with accommodative fiscal and monetary policies is seen to drive the PSEi higher.
“The loose monetary and fiscal policy will drive or boost aggregate spending, which in turn will boost corporate margins,” Tantiangco added, noting that corporate margins are projected to grow by 10 to 15 percent this year.
The strengthening of the peso against the dollar is another factor that will help drive the PSEi upward, the analyst said.
Despite easing inflation, Philstocks said the economy still faces some challenges.
“Upside risks remain, however, on account of uncertainties in oil prices in light of prevailing geopolitical tensions and a choppy global economy,” Philstocks said.