Merkado Barkada
September 30, 2024 | 8:37am
Today is the last day of Q3; the year is 75% done. Only another 6 weeks until we start to get our schedules annihilated by Christmas parties and gatherings. Some of us are only a couple of weeks away from starting rehearsals with officemates for their year-end party programs. Which mildly inappropriate song will we need to practice choreo for on company time this year? Maybe you can guess, but my anxiety is off the charts around this time of year!
> PH: Our calendar of events starts on Tuesday with the open of the Ayala Corp [AC 692.00 ?1.6%; 65% avgVol] prefs sale under the ticker APB3R. We would have had the end of the DITO FOO on Wednesday, but they deferred the offering to “give investors more time”. Instead, our next event is on Thursday with the VREIT Q2 dividend payment, followed by the CREIT Q2 dividend payment on Friday, along with the VLL FOO listing and the PSA’s report on our September CPI and inflation data.
> International: There are no big international events that I’m following this week. That said, I am watching how crypto and gold react to any big soundbites related to inflation, the possibility of a recession, and the potential velocity of future rate cuts.
MB BOTTOM-LINE: The BSP and Department of Finance have already signaled interest in matching the US Federal Reserve’s 50 basis point rate cut, but it remains to be seen how this will be accomplished over the BSP’s final two meetings of 2024. Will they split this cut up into two smaller 25 basis point moves, or chunk them together into one big 50 basis point cut in the next meeting? Or will they do a 25 basis point cut and then get cold feet on the follow-through additional cut after some economic data point comes in surprisingly high or low? What’s incontrovertible is that the BSP’s initial 25 basis point cut followed by the Fed’s surprise 50 basis point cut have dramatically improved the outlook of dealmakers in the Philippines. There is a lot more acquisitions activity going on right now, and the valuations are ticking up for certain sectors that stand to benefit the most from falling rates (real estate development, infrastructure, energy development). You’re starting to hear whispers of a future PSEi print of 8,000. You’re seeing more stories about how 2025 could be a banner year for IPOs and equity raise transactions. There are a lot of tailwinds right now. Tons of foreign buying interest. The market is definitely serving good vibes right now, but like any vibes-based party, it might not take much to get people nervous and thinking about heading to the exits. I’m not trying to be negative, only realistic. I hope my caution looks foolish compared to the PSEi’s performance by the end of the year. But in case it doesn’t, it will (hopefully) save me from making any decisions that require these good vibes to be viable.
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