Stock market watchers bullish on prospects for '06

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Stock market watchers bullish on prospects for '06
Posted: 12:04 PM Jan. 02, 2006Elizabeth L. SanchezInquirer
Published on Page B8 of the January 2, 2006 issue of the Philippine Daily Inquirer

THE YEAR 2005 WAS QUITE stormy for the Philippine stock market after being rocked by political conflicts and rising oil prices.

But market analysts, encouraged by a number of companies expected to brave the market, are bullish on the prospects for 2006.
"We are positive on the stock market. There is a lot of liquidity, from both retail and institutional investors, and we expect new IPOs by February," BDO Securities president Eduardo Francisco said.

Despite the present conditions, online broker 2Trade Asia sees a buoyant market starting January as fund managers scout for better-yielding sectors that are seen to outperform the market in 2006.

"Most may have already factored-in improved economic data, starting with government's firm thrust to balance the budget," Grace Cerdenia of 2Trade Asia wrote in a report.

"Financials, property, energy/utilities, mining and commodity-related shares as well as those engaged in IT-outsourcing services may be favored, as these are likely to obtain either improved share or consistency in demand," she said.

She also said in a separate corporate outlook report that, as far as consumer-listed firms are concerned, mergers and acquisitions will continue to be the main theme.

In 2005, consumer blue chip San Miguel Corp. bought Australian dairy giant National Foods Ltd., Berri Ltd. and is now bidding for Del Monte Pacific Ltd. with the Campos Group.


Jollibee Foods Corp., the country's largest fast food chain, continues to be aggressive as well in acquisitions. Pancake House is also another company to watch out for with its recent acquisition of Dencio's bar and grill restaurant and Japanese quick-service restaurant Teriyaki Boy.

With respect to the power sector, 2TradeAsia projects that more investments in power generation will be required in the next three to five years as power demand is seen to swell by up to 9 percent until 2015.

The Power Sector Assets and Liabilities Management Corp. (PSALM) for one bid out six plants, generating around $567 million in revenues. Included in the sale was the 600-megawatt coal-fired Masinloc plant to the YNN Pacific consortium.

To date, five hydropower plants have been turned over to new investors. The second round of bidding for the 600-megawatt Calaca plant has also started and may possibly be awarded to a new investor this year.

First Generation Holdings Inc. of the Lopez Group is also poised to raise funds via an initial public offering to bid for state power projects.

Power sector reforms also need to be accelerated. So far, regulators have deferred at least 70 percent of the sale of generation companies and transmission assets to the first quarter of 2006. The setting up of the Wholesale Electricity Spot Market was also moved to 2006.

Among the key issues that need to be threshed out include resolving the transition supply contract with power buyers and other mechanics to make these contracts attractive, 2TradeAsia wrote.

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