2023 a ‘challenging’ year for the Philippine stock market

The Philippine stock market faced a year full of “challenging conditions” in 2023, with the local barometer plunging to levels lower than expected due to risk factors such as inflation and rate increases.

The Philippine Stock Exchange Inc. (PSE) index opened the year on a positive note, closing the first trading day up by 0.30% to 6,586.01. Throughout the year, the index hit a high of 7,094.86 on January 18 and a low of 5,961.99 on October 27, before closing the year down by 1.06% at 6,450.04.

Compared with the last trading day of 2022, the PSEi was down by 116.35 points or 1.77% from 6,450.04 recorded on Dec. 29, 2022.

“We were projecting a higher close to the PSE, but higher-than-expected inflation, and rising geopolitical tensions had investors in a risk-off mode,” Regina Capital Development Corp. head of sales Luis Limlingan said in a mobile message.

The country’s inflation rate stood at 4.1% in November, bringing the year-to-date figure to 6.2%, higher than the government’s target range of 2.0% to 4.0%. December and full-year 2023 figures are scheduled to be released next Friday, Jan. 5, 2024.

Data from the PSE show that the daily average turnover for the year fell by 16.5% to P6.09 billion from P7.30 billion in 2022. Net foreign selling stood at P53.67 billion, lower than the previous year’s P68.05 billion.

There were three initial public offerings (IPOs) recorded in 2023—Alternergy Holdings Corp., Upson International Corp., and Repower Energy Development Corp. There were five follow-on offerings, five stock rights offerings, and 11 private placements.

In terms of market capitalization, the local bourse recorded a 1.10% growth to P16.74 trillion from P16.56 trillion in 2022.

“Despite the challenging conditions encountered by the stock market this year, we believe that positive macroeconomic indicators for the country in 2024, such as higher GDP growth, lower inflation, and possible reduction in interest rates, will result in better corporate earnings which in turn will propel our market to higher levels,” PSE president and chief executive officer Ramon Monzon said in a statement.

“The Exchange will continue to introduce new products and push for new laws and regulatory reforms that will promote and encourage wider stock market participation and entice foreign investors back to our market. We will likewise continue to pursue our various initiatives to help and attract companies to list their shares in the Exchange,” he added.

Moving forward, online stock brokerage firm 2TradeAsia said the coming year could start with volatility, as key economic data are set to be released in the coming weeks.

“2023 has been a year of financial aberrations: record-level rate increases, global bank crises, (arguably) the best year of bonds, crypto resurgence, renaissance of tech stocks, major disruption in AI, among others,” it said in a separate commentary.

“Markets will likely welcome 2024 on a potentially volatile note, given the release of key macroeconomic data: US jobs data, purchasing managers’ index (PMI), and local inflation for December,” it added. — BM, GMA Integrated News