Virus surge spoils New Year’s Eve for Philippine financial marts

MANILA, Philippines — There were no fireworks for local financial markets on the last trading day of 2021, as a looming surge in coronavirus cases in the country bring fresh pandemic threats for investors.

The Philippine Stock Exchange index (PSEi) ended the year down 2.89% to 7,122.63 while the broader All Shares index lost 1.68%. Year-to-date, PSEi dipped by 0.2%.

“The index headed sharply lower today as investors priced in developments on the local pandemic front. Rising case counts place a large overhang to prospects for the new year, especially if the surge in cases leads to a re-imposition of mobility and business restrictions,” Rastine Mercado, research head at Chinabank Securities, said.

On Friday, the Philippines recorded 2,961 new coronavirus cases, the highest in nearly two months. This brought the country’s total caseload to over 2.8 million.

Some observers believe the Philippines may be seeing a post-holiday surge, as people leave their houses anew amid the Christmas shopping season. At the same time, there are fears that the heavily-mutated Omicron variant, which was already detected in the Philippines, might be starting to spread here.

“A recent uptick in Covid-19 infections might put the economy's recovery in jeopardy,” Luis Limlingan of Manila-based brokerage firm Regina Capital said.

This year, the PSE registered a new record for capital raised in the stock market at P234.48 billion, breaking the previous high of P228.33 billion in 2012.

This was on the back of the biggest initial public offering (IPO) in the history of the local bourse and REIT listings. For the year, the PSE had eight IPOs, 11 follow-on offerings, four stock rights offerings and eight private placements.

Daily average value turnover for the year was at P9.00 billion, up by 22.5% from 2020’s P7.35 billion average.

Foreign investors were net sellers by P2.32 billion, narrower than last year’s P128.57 billion net foreign selling. They were also responsible for 36.1% of the trading value turnover, while the rest were accounted for by their local counterparts.

A surge in retail investor participation was also logged in 2021 at 31.1%, from 18.2% in 2019 and 26.9% in 2020.

The PSE will open 2022 with the back-to-back IPOs of Haus Talk Inc. and Figaro Coffee Group Inc.

Peso seen remaining weak

At the foreign exchange market, the peso capped 2021 at P50.999 against the US dollar, almost flat from its previous finish of P51 last December 29. Markets were closed on December 30 because of a holiday.

Compared to its finish in 2020, the local unit sagged 5.84% versus the greenback. For Jun Neri, lead economist at Bank of the Philippine Islands, the peso’s weakness is an indicator that the economy is recovering from the pandemic’s carnage. And this depreciation is expected to persist until next year,

“It’s a sign of improving domestic demand prospects as well as rising cost of inputs from abroad resulting not just from evolving supply chains but also to extraordinary demand stimulus across the globe,” Neri said.

“We are looking at 52.60 to 53.200 at the end of next year as demand picks up further. Continued depreciation will likely underpin persistence of elevated inflation and negative real interest rates,” he added. — Ian Nicolas Cigaral and Ramon Royandoyan