Philippine shares cap 2022 flat, putting a chaotic year to rest

MANILA, Philippines — Local shares closed flat on the last trading day of 2022, capping a year of volatility colored by recession fears, rate hike drama, and reopening glee. 

Trading in the Philippine Stock Exchange index ended 2022 at 6,566.22. The broader All Shares index inched down 0.04% while sub-indices were a mixed bag. 

“Philippine shares were able to remain flat despite the broad selloff in the US, as recession fears weighed on investor sentiment in a losing week, month, and year,” Luis Limlingan, head of sales at Regina Capital, said. 

On the other hand, Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp., found that there was still some relief. Year-to-date, PSEi shrank 7.81%. 

“Macro headwinds dominated the year, with higher inflation, higher interest rates, and weaker peso causing risk aversion,” he said in a Viber message.  

As it is, recession concerns remained top of mind for investors everywhere as the global economy is heading in that direction. Central banks around the world beat back raging inflation by tweaking the interest rate levers. 

The resulting rate hikes, which took cue from the US Federal Reserve, fueled much of the negative sentiment towards the end of 2022.

“We started the year at the 7,100 level for the PSEi and with high hopes that a reopening of our economy will lift the index to higher grounds,” said Hernan Segovia, trader at Summit Securities. 

The year also headlined a crucial moment in the Philippines' political history, as it elected a new president in May. The election of the late dictator's son, Ferdinand Marcos Jr., was welcomed by investors in the local bourse with jitters as shares plunged a day after polls closed.

Besides that, Russia’s invasion of Ukraine sent investors scurrying to elsewhere as commodity prices around the world dive-bombed.

By the end of June, the local bourse tallied a daily average value turnover of P7.52 billion, contracting 16.1% year-on-year. 

Data provided by the PSE showed that foreign investors sold more than they bought in the first half of 2022 logging P40.73 billion, 91.16% lower compared to a year ago. 

Few months later, local bourse found itself swimming in a bear market, hitting a low of 5,700.  But Segovia noted that the PSEi’s foray into the bear market proved short. 

“My overall assessment was that despite the many issues and concerns that our market encountered, we somewhat survived all that,” Segovia said. 

Listings galore? 

There were bright spots, of course. The local bourse recorded eight listings in the first half: Haus Talk, Inc., Figaro Coffee Group, Inc., Citicore Energy REIT Corp., Bank of Commerce, CTS Global Equity Group, Inc., Raslag Corp., VistaREIT, Inc., and Balai ni Fruitas Inc.

Two prospective companies postponed their plans to go public amid volatile market conditions in the second half of 2022. Only one company, Villar-led Premiere Island Power real estate investment trust, mustered the courage to list towards the end of the year.

Had it not been for the deferred listings, the PSE said way back in September that the stock exchage would have ended the single-digit showing since 1997, shy of hitting a 26-year high. 

The PSE still credited the 2022 IPO performance with the repeal of the IPO tax. This additional levy was struck out as part of the passage of the Bayanihan to Recover as One Act. 

PSE data showed that it raised P61.92 billion in capital during the first half, a poor showing since it shrank 49.4% year-on-year. The capital raised came from the sale of primary and secondary shares in eight IPOs, one stock rights offering, and four private placements.

The PSE’s capital-raising efforts benefitted from IPOs, anchored by Monde Nissin’s debut in 2021 raised P55.8 billion. This was the largest IPO in the country’s history. 

The conditions for market debuts next year could prove finicky, as interest rate hikes are expected to take effect. As it is, Enriquez said that the biggest IPO in 2023 would be the debut of Razon’s Prime Infrastructure Capital. The size of the listing was projected at P28 billion. 

Enriquez expects the market would still be conducive given that “we expect less collation financial markets” and “this would be an opportunity for companies to raise capital amid a high interest rate environment.”