What's Next for the Stock Market in 2021? PSE Is Aiming For at Least 3 IPOs and 4 REITs
With 2020 and its volatile economy behind us, the Philippine Stock Exchange (PSE) is “cautiously optimistic” for a more hopeful 2021 as it eyes at least three initial public offerings (IPO) and four real estate investment trusts (REIT) for the new year.
“For 2021, we look forward to a better market performance on expectations that confidence in our economic recovery will gradually return,” said PSE president Ramon S. Monzon.
This is despite the fact that the economy remains “fragile” and investor confidence continues to be a “challenge,” according to PSE. News of the new COVID-19 strain is also putting a strain on investor sentiments.
Meanwhile, mass vaccinations won’t take effect until the second half of 2021, which is when the economy is expected to start to truly recover as 2022 is being eyed as the rebound year.
“We choose to be optimistic,” said Monzon.
In 2020, only two IPOs and one REIT were launched: grocery store MerryMart Consumer Corp. and internet provider Converge Solutions Inc. The first-ever Philippine real estate investment trust, Ayala Land REIT (AREIT) also made its debut in PSE in 2020.
The PSE raised around P104 billion in 2020: P44.3 billion worth of IPOs, P41.2 billion on follow-on offerings, P5.6 billion through private placements, and P12.8 billion from stock rights offering.
What should investors expect in 2021?
Aside from the possibility of three IPOs and four REITs, PSE also has a number of other plans for 2021.
“We have a number of follow-on and stock rights offerings in the pipeline which include US$20 million and US$250 million DDS (dollar-denominated securities) offerings of Cirtek and Cebu Air; and the P5 billion stock rights offering by AC Energy,” said Monzon.
The PSE is expecting more companies to return to the stock market as a result of the revised listing rules for REITs, proposed amendments to the Main and SME Board listing rules, as well as the more positive economic outlook for 2021 in contrast to 2020.
The stock market is also planning to launch new products and services such as short selling and new sector and thematic indices like mid-cap and high-dividend yield, in the hopes that these new indices will lead to new index-linked funds.
There are currently only six indices (financials, industrial, holding firms, services, mining and oil, and property), which PSE hopes to add to in 2021.
Meanwhile, the stock exchange is yet to release its rules on short selling, which refers to the high risk and high reward strategy of betting on stocks dropping.
On the investor-side of PSE’s products, it will be releasing a data analytics platform for investors to study trading patterns and history. PSE EASy, the app that allows investors to buy IPOs, will also be entering its second phase, in which follow-on and stock rights offerings will be made available on the platform.
PSE in 2020
With its plans for 2021 in place, PSE hopes that the new year will restore the confidence of investors after a tumultuous 2020, which saw three circuit breakers, its steepest intraday drop in recorded history, and stocks plunging as a result of a halt in economic activity.
Despite falling to its lowest closing level in 2020 at 4,623.42, the PSEi ended 2020 at 7,139.71, just a few points behind its closing 2019 value pre-pandemic.