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Real es­tate stocks in the Philip­pines are among the top win­ners of the global value ro­ta­tion and look poised to be­come a key part of the coun­try’s post- pan­demic stock- mar­ket re­cov­ery.

A gauge of Philip­pine prop­erty stocks has jumped 15 per­cent so far in Novem­ber, on track for its big­gest monthly gain in more than a decade, ac­cord­ing to data compiled by Bloomberg. That’s four per­cent­age points more than the rise in the Philip­pine Stock Ex­change In­dex, a bench­mark prop­erty shares are now set to beat for three months straight.

The sec­tor is in pole po­si­tion to ben­e­fit from the coun­try’s un­ex­pected rate cut Thurs­day, as the cen­tral bank seeks to kick­start growth af­ter the econ­omy con­tracted more than ex­pected in the third quar­ter.

The real es­tate eq­uity resur­gence has al­ready helped Philip­pine stocks claw back losses of as much as 41 per­cent at the PSEI’S bot­tom in March to just an 10 per­cent drop for the year as of Thurs­day.

Cycli­cal shift

SOUTH­EAST Asian stocks have been among the big­gest ben­e­fi­cia­ries of the re­cent global shift to cheaper, cycli­cal names as the de­vel­op­ment of a Covid- 19 vac­cine and a bur­geon­ing re­cov­ery in China stokes op­ti­mism about the global econ­omy next year. Eq­uity mar­kets in the re­gion such as Thai­land and Singapore have led gains across Asia.

Thai­land, Singapore lead South­east Asia charge

INDUSTRIAL­S , real es­tate and fi­nan­cial stocks make up more than 80 per­cent of the PSEI, and the cycli­cal ex­po­sures of those sec­tors will be key to the out­look for the mar­ket, No­mura Hold­ings Inc. an­a­lysts in­clud­ing Abi­gail Chiw said in a note Wed­nes­day.

“We ex­pect the con­glom­er­ates and prop­erty sec­tors to lead the re­cov­ery, hav­ing come from a very low base this year,” they wrote. For real es­tate shares, “we ex­pect se­quen­tial earn­ings re­cov­ery to be led by res­i­den­tials on catch- up con­struc­tion of on­go­ing projects, fol­lowed by malls on pent- up de­mand and later by ho­tels as Covid- 19 fears sub­side.”

An un­ex­pected jump in re­mit­tances from over­seas Filipino work­ers in Septem­ber may also help contribute to an in­crease in spend­ing on real es­tate.

Earn­ings growth

THE No­mura an­a­lysts fore­cast con­glom­er­ates and prop­erty stocks will post earn­ings- per- share growth next year of more than 50 per­cent. That should help push the PSEI to­ward their 7,600 tar­get, they said— about 9 per­cent higher than the near- 7,000 level it traded at Thurs­day.

Still, the re­cov­ery isn’t with­out risks, the an­a­lysts said. A frag­ile la­bor mar­ket and lim­ited fis­cal mea­sures could both con­strain pri­vate con­sump­tion, ac­cord­ing to the note.

“A stronger- than- ex­pected earn­ings- per- share re­cov­ery could po­ten­tially pro­pel the PSEI higher to 8,300, while down­side risks of weaker- than- ex­pected macroe­co­nomic driv­ers could drag it lower to 6,600,” the an­a­lysts wrote.

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