WITH the onset of a new Chinese lunar year, many are wary of what the Year of the Metal Rat will bring to the Philippines.
It is said that the metal rat would be a strong, prosperous and lucky year for almost all of the Chinese zodiac signs.
However, Lynn Yap, a fengshui expert based in Singapore, cautioned that this year may be a “difficult” year with happenings on the three main areas like natural disasters, fraud and financial matters.
And as if on cue, on the first trade of the New Year, the prices stock market fell, and this month, the benchmark Philippine Stock Exchange index dipped to the 7,400-point level.
On the other hand, the big local story of the year so far is the eruption of Taal Volcano, which has devastated families and livelihood in Batangas and Cavite areas. There are also negative events happening overseas such as resurgent Middle East tensions and the ongoing impeachment trial of US President Donald Trump.
Justino B. Calaycay Jr., research head at broker Philstocks Financials Inc., said the rat for the Filipinos is known to gnaw at things, and is thus viewed as a destructive animal.
“The backdrop is not good as it looks like,” Calaycay said, referring to what is happening so far this year. Animals in the Chinese zodiac appear in rotation every 12 years. Rat is the first in the 12-year cycle.
According to Calaycay, whose team at Philstocks traced the activity of the stock market for the Chinese New Year, 1996, the Year of the Fire Rat. It was a good year for the market, but the market crashed the next year, sending many countries in East and Southeast Asia reeling, in what was called the Asian Financial Crisis of 1997.
Then came 2008, the Year of the Earth Rat, when the market also crashed as a result of the Global Financial Crisis. It was very hard for the Philippines to get back on its feet after the two colossal devastations, coupled with several changes in government with the ouster of President Estrada and the assumption to power of President Gloria Macapagal-Arroyo.
“We view the rat [as ready] to gnaw at things. And it may continue to do so this year,” Calaycay said.
Regulatory risk
“This year, what will gnaw at the Philippine economy is the regulatory risk,” he said.
Calaycay explained that the regulatory risks include: the Duterte administration’s move to review the contract of concessionaires Manila Water Co. and Maynilad Water Services Inc., the pressure exerted on the nonrenewal of the television franchise of Lopez crown jewel ABS-CBN Corp., and now the move to review the land deals of previous administrations with Ayala Land Inc.—the first target being its deal involving the rental for UP Technohub in Quezon City. “All of these are contributing to negative investor sentiments,” he said.
Silver linings
Still, there are silver linings, most analysts believe. Many predict the benchmark index will reach up to 8,900 points by the end of the year, a very tough prediction as the main index struggled to get past the 8,000 points for several months now.
First Metro Investments Corp. (FMIC), the investment bank of the Ty group, said there may be six initial public offerings (IPO) this year, compared with just four last year.
Ramon Monzon, president and chief executive oficer of the Philippine Stock Exchange (PSE), said the IPOs will depend on how good the market is. “If the market (PSEi) really is in the high 7,000, or 8,000, many would be enticed to do an IPO,” he said.
“Right now, we still have Del Monte that is waiting in the wings. AirAsia was one of them . . . but [it deferred plans] because of Boracay’s closure. Cal-Comp is there also. There are three backdoor potentials. Also, a backdoor listing of a holding company, and then of course we have Okada. But we need more IPOs,” he said.
“Market developments such as the emergence of REITs (real estate investment trust), the introduction of short selling and the implementation of the proposed 25-percent increase in the minimum public float would spur trading activity,” FMIC said.
The guidelines of short-selling has been approved by the Securities and Exchange Commission (SEC), while the revised rules for REITs were recently released after revisions by the SEC and Bureau of Internal Revenue were completed. These two now become new product offerings at the PSE.
Cristina Ulang, FMIC research head, however, said questions still linger on whether the short selling can drive volume to the entire equities market but the REITs may provide some volume since there are already companies that signified their intent to raise funds through the REITs.
Ayala Land was the first company to publicly signify its intent to launch its own REIT, but that may change with the review of the land deals entered into by the government.
Christopher Mangun, research head at AAA Securities Inc., said there are also good stocks that are worth investing in this year.
“In the banking sector, we like MBT (Metropolitan Bank and Trust Co.) as the central bank continues with accommodative policies. It is also undervalued compared to its peers. For consumer, we like FRUIT (Fruitas Holdings Inc.) as it expands from its recent initial public offering. Consumer spending has started to pick up as inflation remains manageable,” he said.
