PHL stocks are sure bet to top an­a­lyst on elec­tion spend­ing

Business Mirror - - FRONT PAGE -

PRES­I­DEN­TIAL elec­tions are a boon for Philip­pine stocks. The na­tion’s bench­mark equity in­dex has climbed an av­er­age 20 per­cent in each of the years when the past four polls have been held, com­pared with an an­nual av­er­age of 14 per­cent since 1992, the date of the first elec­tions since the ouster of dic­ta­tor Fer­di­nand E. Mar­cos. The bat­tle for the pres­i­dency will sal­vage stocks this year, as spend­ing by politi­cians and of­fi­cials spurs profit growth at me­dia and con­sumer com­pa­nies, ac­cord­ing to Luz Lorenzo, the na­tion’s top- ranked an­a­lyst.

Filipinos go to polls on May 9 to choose a pres­i­dent and vice

pres­i­dent, just two of the more than 18,000 posts that will be filled na­tion­wide. This year’s elec­tion spend­ing could reach as much P47 bil­lion ($987 mil­lion), based on the govern­ment’s of­fi­cial list of can­di­dates for pres­i­dent, vice pres­i­dent, se­nate and party-list groups, and spend­ing limit per voter set by law. The Philip­pine Stock Ex­change in­dex is down 2.6 per­cent this year, af­ter fall­ing in 2015 for the first time since the global fi­nan­cial cri­sis. “There is a bias for stocks to go up dur­ing elec­tions be­cause there is a lot of spend­ing go­ing on that com­pa­nies ben­e­fit from and this shows later in the bot­tom-line,” said Lorenzo, head of Philip­pine re­search at May­bank ATR Kim Eng. “Ob­vi­ous ben­e­fi­cia­ries of this spend­ing are the me­dia and con­sumer com­pa­nies.”

Lorenzo, who was named best strate­gist and best re­search an­a­lyst in 2015 by the Fund Man­agers As­so­ci­a­tion of the Philip­pines, rec­om­mends in­vestors buy shares of me­dia and con­sumer com­pa­nies, in­clud­ing ABS- CBN Corp., the na­tion’s top broad­caster, and Jol­libee Foods Corp., the big­gest lo­cal fast­food com­pany. She pre­dicts the in­dex will rise to 7,000 by the end of the year, or 3.4 per­cent above Wed­nes­day’s clos­ing level.

Shares get a sus­tained boost af­ter the re­sults as the new govern­ment his­tor­i­cally rolls out mar­ket-friendly poli­cies to boost eco­nomic growth, Lorenzo said. “The rise in share prices is no longer elec­tion-re­lated and it’s driven more by what’s hap­pen­ing in the econ­omy,” she said. “What we have seen his­tor­i­cally is the econ­omy gets pro­gres­sively stronger with each ad­min­is­tra­tion.”

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