Stock market poised for rebound in 2019 — FMIC

MANILA, Philippines — The stock market may stage a rebound this year, driven in part by election-related spending and the continued heavy outlay on infrastructure and capital goods, according to The Market Call, a joint report by First Metro Investment Corp. (FMIC) and the University of Asia & the Pacific. 

“The Philippine equity market looks forward to a rebound in 2019 based on positive developments in the local front. The rapid deceleration of domestic inflation, erasure of crude oil gains in 2018, election spending, and continued ramping up of infrastructure and capital goods spending point toward resiliency in domestic demand and better earnings prospects,” the report said.

It said a number of the positive developments that improved market conditions and encouraged investors to park their funds in stocks again happened in the latter part of 2018.

These include the dovish statements by US Federal Reserve officials, President Trump’s hints at some agreement with Xi Jinping in the G20 Summit over the trade war between the US and China, and greater expectations that domestic inflation had peaked in October.

This enabled the Philippine Stock Exchange index to gain by 3.2 percent to settle at 7,367.85 by end-November last year. 

“The reversal from a year low of 6,843.83 on Nov. 9 has carried on through early December as it nearly brokethrough the 7,500 resistance and hit 7,703.82 by Dec. 4. Thereafter, it has corrected, but remained in bull market territory,” The Market Call said.

Among the different sectors, the financial sector made remarkable gains in November, rallying by 9.4 percent as investors were swayed by banking stocks’ impressive third quarter earnings.

Meanwhile, the holdings and property sectors reversed October’s losses, ending with a 3.2 percent and three percent growth, The Market Call said.

Industrial stocks again ended flat with a meager 0.1 percent uptick as strong earnings from energy stocks were not enough to offset dismal incomes posted by food and beverage manufacturers due to either the tax reform or foreign exchange losses. 

On the other hand, the services sector continued to slump, accelerating its decline with a 4.2 percent drop in November. 

“After being last month’s best performer among sectors, the mining and oil turned into November’s worse, declining by 11.3 percent,” it said. 

Both FMIC and UA&P said the market’s performance in November and consequently in December may have provided a hint of the stock market’s direction in 2019.