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Friday, December 27, 2013

The Philippine Stocks Market 2013: A Year in Review

As December 30 and 31 are declared national holidays here in the Philippines, our last trading day for 2013 has ended by the close of the bell last December 27. How did our stocks index fare as compared to last year? Let us look at the comparative numbers below:

As you can see, The Philippine stocks' main index grew by a modest 1.33% from last year. After breaching an intraday record high of 7,403.65 last May 15, 2013 PSEi has since experienced an up and down ride, primarily attributed to tapering talks from the US Fed. It even reached an intraday bottom of 5,562.13 last August 28 with many stocks analysts signalling the start of the bearish cycle. In the end, the local bourse only managed to squeeze-in a 77.10 increase from prior year's close. PSEi increased by 32.95% last 2012.
2013 Performance per industry sector

Only holding firms and services sector posted better results this year, gaining by 5.41% and 8.20% respectively. By comparison, all the sector indices increased in 2012 except mining & oil. The industry is still marred with uncertainties brought about by issues concerning the environment and profit sharing with the government. Mining & oil has declined by 17.43% and 38.59% for 2012 and 2013, respectively.It should be noted that while most of the sector indices have declined, only mining & oil has declined from in a two-year cumulative data. Here is a comparative change from 2011 to 2013 levels for the Philippine stocks indices:

2013 vs 2011 % change
PSEi               34.72%
all shares         18.70%
financials         47.38%
holding firms    54.97%
mining & oil    -49.30%
property          48.82%
services           15.45%
industrial          22.84%

Outlook in 2014

What I realized looking at the data was how extraordinary 2012 had been for Philippine stocks. Excluding mining & oil and services, all of the sector indicators have gained by more than 20% in 2012! I do not wish to imply that it was overvalued, but the massive gains were posted in a short span and thus became more susceptible to bigger drop. As they say, the higher the climb, the harder the fall.

The close of 2013 has more or less dragged us back to our previous 2011 figures. Factoring in the country's growth targets, I expect a more stable and more sustained ascend from here on. I believe holding firms will still continue to move up given that these companies have the large resources from growth expansion. Companies like MPI, SM, AC, JGS - they are in the position to partner with government infrastructure projects, along with companies in construction business like MWIDE, EEI, HLCM and LRI. 2014 will also push capitalization higher for financial sector in compliance with the Basel III implementation. BPI and PNB have started to raise additional fund via stock rights offer just before the year's close. Fear of a bubble still lingers for property sector while speculative stocks like mining & oil companies will most likely be avoided, especially when other "less risky" stocks can outperform.

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The information provided in our review may not be as relevant today given the time gaps and change in varying economic conditions. While we strive to account every business possibilities that may affect a company's profitability, this is not a recommendation to buy or sell these particular stocks. We cannot be held liable for any investment decisions made in consequence to our articles.