Investor confidence in PH pushes share prices higher


Posted at Aug 22 2012 11:11 AM | Updated as of Aug 22 2012 11:08 PM

MANILA, Philippines - While stock prices continue to rise, trading volume has thinned in recent weeks. Two bankers say confidence in the growth of the economy and earnings have pushed share prices to expensive levels.

But some investors need convincing that the pace of growth will be sustained.

"Our valuations are not that cheap, as cheap anymore. We're trading at 16x PE. It's actually highest among our neighbors. People are just looking, stepping back to see where the earnings really come in as expected. Investors are watching on the sidelines, but waiting for the earnings, 2nd quarter GDP to come in," Marvin Fausto, chief investment officer of BDO Unibank, told ANC's Coco Alcuaz.

Second quarter GDP figures will be released next week.

Rafael Algarra, investment banking executive vice president of Security Bank, said he won't be surprised if the Philippine economy exceeds the first quarter GDP.

"We're really projecting around the same level, around 6.4, but I won't be surprised if it goes higher than that... We're now the highest GDP in the first quarter in Southeast Asia. In Asia, it's only China that's ahead. If there's just one quarter we touch near their levels, you probably have some people starting to look up,"

The two bankers said the first beneficiaries of faster growth will be banks and property developers.

Fausto noted that investors should look at property companies that are making significant investments in their developments and landbanks.

"After the banks, the property sector -- you're looking at companies that are developing houses, commercial centers , these companies that will benefit from OFWs, consumer spending," Fausto said.

Algarra said there is no oversupply in the property sector. "There are a lot of people who say there must be oversupply and might be a bubble. I don't think we're there yet. Most buyers of homes are buying to own... It's very difficult for them to sell something they'll be living in," Algarra said. - ANC